New Brunswick continues to reap the rewards of increased federal funding and a recovery from a pandemic to close its budget surplus and pay down debt.
The province is now forecasting a surplus of $ 89.1 million for the current 2021-22 fiscal year.
Finance Minister Ernie Steeves said the unique circumstances including economic growth of 3.7% over last year as spending rebounded are temporary and that is why he is not spending the surplus.
“The rate of growth we are seeing this year is temporary and not really sustainable,” he said on Tuesday. “We cannot rely on the temporary COVID-related measures that are influencing our current revenue growth.”
Federal spending on COVID-19 measures included $ 103 million for health care, including money to support vaccinations, and $ 45.1 million for stimulus spending on construction projects.
Other federal funds that did not go directly to the provincial treasury went to New Brunswickers who had more money to spend, increasing Harmonized Sales Tax revenues by $ 84.6 million over Steeves’ forecast in his March budget.
âThat’s where a lot of the HST and tax revenue came from,â he said. âPeople spent money, but they stayed home, stayed in New Brunswick, and spent it here.
The province has also saved money through delayed surgeries that will eventually be postponed and will need to be paid for, Steeves said.
CUPE salary increases taken into account
Federal transfers are now expected to exceed March’s budget by $ 93 million. Total revenues are expected to be $ 487 million higher than forecast, while total expenses will only increase by $ 153 million.
The surplus of $ 89.1 million is an even more optimistic projection than that contained in the October first quarter update, when the surplus was set at $ 37.7 million.
But that’s less than the $ 200 million to $ 300 million surplus Higgs was talking about just a few weeks ago.
Indeed, it now includes the expected cost of new contracts with unionized workers in the public sector. Members of the Canadian Union of Public Employees are voting this week on tentative agreements reached with the province over the weekend.
Steeves wouldn’t say precisely by how much the wage settlement reduces the surplus.
“We’ve budgeted some of them for their back pay, their retroactive pay, but those numbers have yet to be finalized, and quite frankly, the deal has yet to be finalizedâ¦ so we’re a little ahead of us at the moment.”
Liberal financial critic Rob McKee has said he believes continued federal funding and economic growth will lead to a surplus well over $ 89 million, and Progressive Conservatives are covering up this reality so they can say no to additional spending .
âYou have to sort out some issues before you go to the bank with $ 400 million,â he said, referring to last year’s surplus.
McKee said sectors such as housing and mental health services need more funding.
“We have to use the money we have to solve these problems.”
But he wouldn’t say what would be an appropriate surplus.
âIt’s not a magic formula with a specific number. We need to take a balanced approach. Yes, we have to pay down a debt, but we also have to take care of New Brunswickers at the same time. ”
The second quarter update does not take into account the funding or potential expenses of a possible child care agreement with the federal government.
Originally, Steeves forecast a deficit of $ 244.8 million for this year.
The surplus and other tax changes to capital spending reduce the province’s accumulated debt by an additional $ 304 million, bringing it down to a planned amount of $ 13.4 billion. As a result, the province will spend $ 13 million less than planned on debt interest payments.