Nova Scotia·NewThe first update on the 2025-26 provincial budget shows Nova Scotia on track for a $1.2-billion deficit, a record number well above the $697-million deficit Finance Minister John Lohr projected when he tabled the document last February.Finance Minister John Lohr gives no indication austerity measures being consideredMichael Gorman · CBC News · Posted: Sep 22, 2025 1:30 PM EDT | Last Updated: 1 hour agoFinance Minister John Lohr says he remains optimistic about Nova Scotia’s economic outlook, despite his government’s forecast of a record $1.2-billion deficit. (Dan Jardine/CBC)The first update on the 2025-26 provincial budget shows Nova Scotia on track for a $1.2-billion deficit, a record number well above the $697-million deficit Finance Minister John Lohr projected when he tabled the document last February.The minister struck an upbeat tone while speaking to reporters on Monday.”I think the economic forecast, the economic prospects for Nova Scotia are very strong,” said Lohr.”We see lots of opportunities in the natural resources, in Wind West, we’re building housing — I think we will continue to see population growth and people coming here to work.”A variety of factors contributed to the deficit’s push into the 10-digit level for the first time.What’s driving the increaseDocuments show that in the first quarter, 12 departments and other government entities required additional appropriations — or out-of-budget spending — of more than $1 billion.That includes almost $40 million for the Communities, Culture, Heritage and Tourism Department (mainly for the film and television production incentive fund), almost $60 million for the Seniors and Long-Term Care Department (mainly for increased participation in the home support direct funding program) and almost $411 million for the Health Department.The Health Department’s extra spending includes money for items such as travel nurses ($60 million) and almost $150 million to cover wage settlements for health support workers, contract payments to Emergency Health Services and changing funding models for doctors.Health spending now accounts for about 46 per cent of the budget, but Lohr said it’s a function of his government’s commitment to fix health care after years of “inadequate investment.””We have made those investments in health care, we’re continuing to make them. We believe that those will pay off results in the future.”NDP Leader Claudia Chender says people are not seeing the benefits to match the record spending being advanced by the Nova Scotia government. (Dan Jardine/CBC)Officials also revealed Monday that the province’s first $200-million payment as part of a national lawsuit settlement against tobacco companies went into general revenue and was applied to the books for 2024-25.Lohr noted that the deficit presented Monday is a forecast based on the best and most accurate information currently available. He declined to say whether he thought things would turn around, as they have for the Progressive Conservatives in each of the previous years they’ve forecasted deficits only to find themselves in the black by the time the books closed.”I can’t predict what the end of the year will look like.”Repeating history this time could be a challenge for Premier Tim Houston’s government.In 2022, what was a budget with a $584.9-million deficit turned into a $338.6-million surplus by the time the books closed. It was another positive swing in 2023, going from a deficit of $506.2 million on budget day to a $122.8-million surplus.Interim Liberal Leader Derek Mombourquette says the Progressive Conservative government appears to have few ideas for how to get the deficit in check. (Dan Jardine/CBC)The budget tabled in 2023 included a $278.9-million deficit, only to see the books close with a $141.7-million surplus. And on Monday, the government revealed that the $467.4-million deficit included in the 2024 budget was ending as a $264.8-million surplus.Making such a swing with the current budget will be difficult, however.Finance Department officials noted Monday that population growth in the province, which has driven major revenue increases in recent years, is slowing. Officials forecast growth at 0.9 per cent for this year and 0.8 per cent for 2026. The population as of April was about 1.08 million, with an update expected later this week.Those numbers are expected to lead to lower growth in the labour force and an increase in unemployment.Economic uncertaintyMeanwhile, the economy faces major uncertainty due to factors such as the impact of Chinese tariffs on seafood, a primary economic engine for the province. Finance Department officials expect those tariffs to remain in place for the foreseeable future.Officials are also banking on CUSMA-compliant trade goods continuing to be able to cross the border into the United States without being subject to tariffs.To date, the government has not tapped into a $200-million contingency fund it announced earlier this year intended to help businesses affected by U.S. tariffs.If any of this could lead to austerity measures from the Progressive Conservatives, Lohr gave no indication of that while speaking to reporters Monday.”We are absolutely committed to meeting the needs of Nova Scotians, we’re committed to affordability for Nova Scotians, we’re committed to seeing our economy grow. How the blend of all of that turns out in the next budget, I can’t predict right now, but that’s the direction that we are going.”Opposition leaders express concernNDP Leader Claudia Chender said the Progressive Conservatives have managed to grow the deficit without much to show for a “shocking amount of spending.””We heard the minister use the word ‘affordability.’ The reality is many, many Nova Scotians across this province are struggling to afford housing,” she told reporters.”We still have a rate increase coming from Nova Scotia Power.”Interim Liberal Leader Derek Mombourquette said the Progressive Conservatives appear to have no plan for dealing with what would be a record deficit if things do not improve.”You now have a billion-dollar deficit for a population of a million people,” he told reporters.”This is significant. This is generational debt that we’re taking on.”Mombourquette said he’s concerned that Finance Department staff are talking about softening population growth and major uncertainty around the economy, and yet Lohr is offering few solutions other than potential natural resource projects that could take “a decade or more to develop.”Finance Department officials also released two other major accounting changes that have an impact on the bottom line.A change requested by the auditor general’s office means the mortgages given to long-term care home builders can no longer be recorded as loans. Instead, they’re now recognized as tangible capital assets.That change, reflected for the first time in adjustments to last year’s budget, added almost $880 million to the net debt for 2024-25.Another major change is a result of the Progressive Conservative election promise last year to scrap the tolls on the two bridges between Halifax and Dartmouth. That change meant a one-time increase to the net debt of about $318 million, which the government moved to last year’s books.ABOUT THE AUTHORMichael Gorman covers the Nova Scotia legislature for CBC, with additional focuses on health care and rural communities. Contact him with story ideas at michael.gorman@cbc.ca
Nova Scotia’s forecasted deficit tops $1B for first time
