New N.B. finance minister blames Tories as deficit grows to $92M

Fredericton, NB – New Brunswick's projected deficit has grown to $92 million, and the new Liberal finance minister is blaming the previous Progressive Conservative regime, arguing he only has four months left in the fiscal year to turn things around and balance the budget.

René Legacy released the province's second-quarter results on Friday, and the picture is gloomier than at budget time last spring, when the Tories predicted a rosy $41-million surplus.

It is also a significant erosion since the first quarter update, representing the first three months of the fiscal year from April to June. Former Tory finance minister Ernie Steeves reported during the first-quarter fiscal update that the deficit was estimated at $28 million.

"We're still committed to trying to shrink down that deficit," Legacy told reporters at a media conference in Fredericton.

"The previous government had a plan. They put it in earlier this year with their budget. The plan was to have a $41-million surplus.

"I'm asking my staff if there's any course correction we can take to maybe bring that down. But obviously this is the starting point that we have."

Glen Savoie, interim leader of the Tories and the Official Opposition, said the numbers in the update did not come as a surprise.

"Despite a budget of nearly $3.8 billion, the cost of health care for New Brunswickers has driven this deficit," he said in an email. "The Opposition will be watching to see what new charges the Liberal government applies to the fourth quarter numbers, given they have a one-billion-dollar math mistake in their latest Liberal platform," he said, without elaborating.

The charge about a $1-billion accounting mistake was made repeatedly by the Tories during the election campaign, but the Liberals stood by the numbers in their platform, steadfastly denying they had made an error.

Pressed by reporters on Friday, the new Liberal finance minister, only 12 days into his job, didn't have any ideas where he'd find savings. He said he only received the latest figures last week and wanted to get them out before the public, to be as transparent as possible.

The problem appears to be related to spending, not the amount of money coming into government coffers.

Total revenue is projected to be $119 million higher than budget, due in part to an increase in conditional grants from Ottawa and gains in both personal and corporate income tax.

But total expenses are projected to be over budget by $252 million. The most significant difference is in the Department of Health, which is over budget by $193 million due to higher operating and labour costs in the regional health authorities. A significant portion of this, the government says, is caused by overtime and travel nurse costs.

The travel nurse contracts, a $98-million expense in 2024-25 alone, created a flood of controversy earlier this year when they made the national news. Even former premier Blaine Higgs was critical of them, blaming the Vitalité Health Network for signing bad deals with private firms.

Legacy said he was straight jacketed by those contracts but is also hemmed in by the higher expenses because his Liberal government has promised not to penny pinch on health care, where there is significant demand from the public for better services in crowded ERs and clinics.

The $92-million estimated deficit represents less than one per cent of the province's $13.5 billion budget. That's why the finance minister said he'd asked all departments other than health to be cautious in their spending.

The Liberals had promised to balance budgets, just like Higgs did in every one of his six years in power — the longest string of balanced budgets in the country — but Legacy believes the previous government is mostly responsible for the red ink that could be spilled by the spring.

"There is opportunity for us to reach out to the departments to try to curtail some of the proposed spending, but because we're in the eighth month of the fiscal year, we're starting to be limited on what we can do on that."

Megan Mitton, deputy leader of the Green Party, said the focus on deficits and surpluses was misguided.

She told reporters Friday the politicians should be more concerned about offering decent public services.

"We have some major crises and one of the top ones is definitely health care," she said. "That may require a deficit budget this year in order to invest in things like retention bonuses for nurses and preventative health care."

She said it made more fiscal sense to pay homegrown nurses properly rather than sign expensive contracts for travel nurses, whose companies often charge double or triple normal costs.

"If people don't have access to primary health care, can't be seen in the ER, don't have housing, don't know where their next meal is coming from, top of mind isn't, 'oh does the government have a deficit this year?'Top of mind is what's going to happen to help me? Because there are people in crisis right now."

John Chilibeck is a Local Journalism Initiative Reporter with The Daily Gleaner in Fredericton, New Brunswick. Title Image: Cityscape, Saint John, New Brunswick, image by Wayne Linton from Pixabay.