Spending Under-Budget, Revenue Declines Due To Economic Factors

Like other jurisdictions, Nova Scotia is feeling the impact of a soft economy reflected in the province's second fiscal update for the 2012-13 budget released today, Dec. 13, by Finance Minister Maureen MacDonald.

"Where we have control, we are doing the hard work we need to be doing. I'm pleased to see departmental spending is on track to come in under budget for the fourth time in four years," said Ms. MacDonald. "However, Nova Scotia is experiencing the same economic pressures as other jurisdictions, resulting in lower revenues and our need to adjust our economic forecast."

Forecast highlights include:

• The forecast projects a deficit of $277.2 million, compared with $249.3 million in the September update and $211.2 million at budget time.
• Total revenues, including net income from government business enterprises, are forecast to be $9.2 billion, down $90.5 million from budget. This decline includes $36.6 million in federal funding for the convention centre that will be booked in future years, released as part of the September forecast update.
• Total expenses are forecast to be $9.5 billion, $26.1 million lower than budget.
• Departmental spending is forecast to be $25.7 million lower than budget.
• Gross debt-servicing costs are forecast to be $434,000 under budget.
• Additional appropriations are required to support the land purchase from Bowater Mersey Paper Company, disaster assistance for those affected by the flooding in Truro (partially recoverable from the federal government) and to reflect the recent conversion of three towns to the Provincial Police Service Agreement (fully recoverable from the municipalities).

This forecast update includes revisions in the economic assumptions for the 2012-13 budget. Economic conditions, locally, nationally, and globally, have resulted in a revised economic growth rate for Nova Scotia of 1.6 per cent for 2012, down slightly from the budget forecast of 1.7 per cent. Nova Scotia joins many other jurisdictions in reducing growth projections for 2012 and 2013.

"Nova Scotia is not immune to the lingering uncertainty throughout the global economy and as a result the provincial economy is expected to grow more slowly than we had assumed in the 2012-13 budget," said Ms. MacDonald. "Getting to balance will be tough, but we're working very hard to do just that."

Forecast update materials are available on the Department of Finance's website at www.novascotia.ca/finance/en/home/budget/forecastupdate.aspx .