New BrunswickThe Holt government has used the province’s $156-million first instalment from a lucrative legal settlement with three major tobacco companies to sharply reduce last year’s budget deficit.Province’s $156M initial instalment from legal settlement with 3 firms lowers shortfallJacques Poitras · CBC News · Posted: Sep 29, 2025 3:05 PM EDT | Last Updated: 2 hours agoThe provincial government used its first installment from a legal settlement from tobacco companies to help reduce the budget deficit. (CBC)The Holt Liberal government has used the first cash from a lucrative legal settlement with three major tobacco companies to sharply reduce last year’s budget deficit.Final financial statements for the 2024-25 fiscal year, which ended March 31, show that the New Brunswick government applied $156 million from its share of the settlement — the first instalment it received — to the year’s bottom line. Finance Minister René Legacy said that made sense because “this settlement was for costs that have already been incurred in the health-care system.” The move helped reduce what had been a projected $398.9-million deficit to $104.4 million; the government also benefited from unexpectedly high revenue in some other areas. WATCH | Initial tobacco lawsuit cash used to partially pay down N.B. budget deficit:Cash from tobacco lawsuit has been used to drive down budget deficitThe New Brunswick government used $156 million from a lucrative tobacco settlement to help cut last year’s deficit to $104 million, far below the projected figure of $398 million. But high health care and social development costs also contributed to overall spending being $416.9 million more than budgeted.The funds are part of a $32.5-billion settlement in a lawsuit by Canadian provinces and territories against major tobacco companies over the health-care costs of treating people with smoking-related illnesses.New Brunswick announced its participation in the tobacco lawsuit in 2006.The province is in line to eventually receive around $600 million from the tobacco settlement, with the yearly instalments fluctuating based on several factors, including the tobacco companies’ ability to pay.Provincial officials said Monday that the settlement amount may fluctuate to the point that there will be no money payable in the current 2025-26 fiscal year.”Future annual payments remain uncertain,” said Legacy.Call to fund quit-smoking measuresAdvocacy groups including N.B. Lung and the Canadian Cancer Society had lobbied for the province to use some or all of the money to fund quit-smoking programs.New Brunswick Finance Minister René Legacy presented his first budget in March, projecting a $549-million deficit for the 2025-26 fiscal year. That number has since risen sharply. (Mike Heenan/CBC)The decision to use the money to lower the deficit also means the province’s accumulated debt grew to $12.3 billion as of March 31, rather than the forecast $12.5 billion.The deficit relief may prove short-lived because the Liberals are projecting a $668.7-million deficit this year, almost $120 million more than Legacy forecast in his first budget in March.Officials said it’s too early to say whether the government will choose to spend future tobacco settlement instalments or apply them to future deficits.The government spent $337 million more than budgeted on health care in 2024-25, a fiscal year that began with the budgeting of the Progressive Conservative government of Blaine Higgs, followed by the newly elected Liberals under Susan Holt taking office and making spending decisions.Officials estimated that a federal harmonized sales tax holiday during the last Christmas season — which meant the province could not collect HST revenue either — cost New Brunswick $40 million to $50 million. ABOUT THE AUTHORJacques Poitras has been CBC’s provincial affairs reporter in New Brunswick since 2000. He grew up in Moncton and covered Parliament in Ottawa for the New Brunswick Telegraph-Journal. He has reported on every New Brunswick election since 1995 and won awards from the Radio Television Digital News Association, the National Newspaper Awards and Amnesty International. He is also the author of five non-fiction books about New Brunswick politics and history.
Influx of tobacco cash helps lower New Brunswick’s deficit for 2024-25 fiscal year
