N.S. budget contains major cuts as province confronts $1.2B deficit
The Nova Scotia government’s latest budget includes more than $300 million in cuts, and even deeper cuts could be coming over the next four years.This year’s cuts include the equivalent of more than 1,000 full-time jobs spread across government and the broader public sector, such as Crown corporations and the regional centres for education that oversee schools. Officials say the public sector cuts will target management and administration rather than front-line services such as teachers.The government plans to reduce the civil service by five per cent and the broader public sector by three per cent each year over the next four years as part of its so-called fiscal sustainability plan, an initiative intended to get government expenses in line with revenues.Finance Department officials said during a technical briefing with reporters Monday that the five per cent job reductions in the civil service can most likely be achieved through attrition and retirements.The size of the cuts increase each year over the life of the plan, with the following targets: $622 million in 2027-28.$757 million in 2028-29.$914 million in 2029-30.Finance Department officials said the size of the cuts planned do not account for any new revenue that could come from natural resource development or other projects, such as the increased defence spending promised by the federal government.Government officials said job cuts for this fiscal year must be achieved by January 2027. The departments expected to take the biggest hit are the Justice (83 full-time equivalent posts) and Social Development (78 full-time equivalent spots).The government is also cutting discretionary grant spending by $130 million. The impact of the cuts to grants is yet to be known, and with the budget being tabled Monday it’s expected those calls will go out this week. No further details were provided.This latest budget includes projected revenues of $17.3 billion and expenses of $18.9 billion, and the province is projecting deficits for the next four years. Despite the talk of a need for restraint, department spending is up about 7.7 per cent compared to last year's budget.The net debt comes in at $27.9 billion with a net-debt-to-GDP ratio of 39.4 per cent.It reflects the stinging reality that became clear for Premier Tim Houston last fall: the record revenues driven by population growth in Nova Scotia have dried up. The Houston government had benefited from that growth, but it's clear there will be no windfall this year to make up for his government’s penchant for over-budget spending.Since coming to power in 2021, the Progressive Conservatives have spent about $1 billion or more each year outside their own budgets. For 2025-26, it was about $1.4 billion.Finance Minister John Lohr told reporters he does not regret that approach, but said out-of-budget spending, or additional appropriations, would be less likely unless revenues increase."Since coming into government we have invested, invested, invested in Nova Scotians [and] in the things that Nova Scotians need," he said."In health care, in education, in [a] school lunch program. And we will make no apologies for that."Lohr and the premier have both argued that spending were necessary to make up for years of underinvestment by previous governments more focused on balancing the books.But opposition leaders said the current financial situation is one of the government's own making—and now the public will pay for it in the form of job cuts and reduced support for programs."They have had more revenue than any other government in history and what we see today, five years later, is not many results," NDP Leader Claudia Chender told reporters."We don't see improvement to people's cost of living. Power bills are up $400 more a month for the average family, housing is out of control. And yet we're told Nova Scotians need to sacrifice."Interim Liberal Leader Iain Rankin told reporters that the government's inability to keep department spending in check has resulted in less financial firepower at a time when it is required."This is about spending a whole bunch of money that they didn't have the last number of years," Rankin said. "If that was kept for fiscal capacity, then we would be able to absorb the pressures that we're seeing."Despite the financial changes, Lohr made clear Monday that his government would continue to spend on its core focus areas: health care, housing, education and economic development.Almost $1 billion this year will go toward the redevelopment of the Halifax Infirmary, while about $200 million is being spent on health-care construction in Cape Breton Regional Municipality.The government is spending about $874 million on 26 long-term care projects under construction and about $110 million will go toward building and renovating eight schools across the province this year.An additional $476 million will go toward highways and other structures, such as bridges.The government will spend $6.8 million to contract a dedicated fixed-wing water bomber service. Halifax Harbour Bridges will get about $120 million for general maintenance and operations, including the second year of a two-year project to remove paint from the MacDonald Bridge.The government will also spend about $34 million on cybersecurity enhancements, including the creation of a new cybersecurity office to help increase awareness about the risk of cyberattacks for municipalities and other entities, including small businesses. They also plan to create a resilient data centre to ensure recovery of critical systems in the event of an attack.Premier Tim Houston’s government is expected to table a budget in February. That budget will need to address a perfect storm of financial burdens facing Nova Scotia. The CBC’s Michael Gorman explains. The government is also increasing the capital tax on financial institutions by two percentage points, raising it to six per cent. That move will raise $37.6 million annually when it’s fully implemented. It applies to the taxable capital amount for banks and trusts.People who drive electric vehicles and hybrids will begin seeing a new tax on Oct. 1, payable when registrations are renewed. The government says the measure is intended to help pay for road maintenance. Fully electric vehicles will cost $500 every two years and hybrids will cost $250 every two years. The levy is expected to raise about $3.3 million annually when it’s fully in place.There will also be a new vaping tax that is harmonized with the federal government. That’s expected to generate about an additional $11.7 million on top of the $2.8 million brought in last year through a provincial tax.Finance Department officials say the change should help address lost revenue for provinces when someone orders products online from another part of the country.The cuts included in Monday's budget follow leaks last week that the government was shutting down or reducing the hours of tourist bureaus around the province and closing several museums. The province is also cutting the wildlife branch of the Natural Resources Department as part of a reorganization to increase resource development projects.MORE TOP STORIES
