HALIFAX – A drop in tax revenues is getting most of the blame for a $25 million increase in Nova Scotia’s projected deficit, which now stands at $122.5 million for the current fiscal year.
In an update released Monday, Finance Minister Randy Delorey said lower-than-expected growth in provincial tax revenue was the main reason for a deficit higher than the $97.6 million projected in the spring budget.
Increased costs for home care and the bill for dealing with a harsh winter also contributed to the larger deficit figure.
“Continuing economic uncertainty means we have to continue to be diligent in our spending and fiscal management to maintain our fiscal plan and achieve a balanced budget in 2016-2017,” said Delorey.
Finance Department figures show provincial tax revenues are down $36.6 million, including $14.1 million in personal income tax.
The reductions are expected to be offset by higher revenues from government business enterprises including a $14 million increase in net revenue from the Nova Scotia Provincial Lotteries and Casino Corporation.
Overspending also played a role in the deficit figure, with four departments needing a total of $13.2 million in additional funding.
The two biggest appropriations included an extra $5.7 million for the Health Department for home care costs associated with an increase in demand, and $3.5 million for equipment repairs and snow and ice removal by the Transportation Department.
The Department of Business is also expected to be $2.8 million over budget because of the divestiture of the Keltic Lodge resort.
The figures also show the now-defunct film industry tax credit has the potential to drive the province further into deficit.
The province budgeted $24.1 million for the program and is currently processing $36.5 million in applications. It has also received another $32.6 million in applications since April 1. The government announced it the spring budget that the tax credit would be replaced by a new $10-million film incentive fund.
Progressive Conservative Leader Jamie Baillie said while the government can still cut its way to a balanced budget over the next two years, the swelling deficit figure shows there’s no plan for the province’s sputtering economy.
“The government’s numbers are going backwards because too few people are working and the ones that are, are making too little in income,” said Baillie.