Nova Scotia surplus rises to $149 million, but tax revenue lower than expected

HALIFAX – The Nova Scotia government closed the books on the 2016-17 fiscal year Thursday, registering a surplus of nearly $150 million — about $110 million more than the Liberals touted on the campaign trail in May.

Finance Minister Karen Casey attributed the change to the difficulty in predicting revenues, and said figures last December indicated the province needed a more cautious approach to spending.

“During the period from mid-January till March we had new information which showed that those numbers were more positive, so with that volatility it is hard to do any kind of prediction,” said Casey.

She rejected any notion that the lower figure suited the government’s positions on such things as health care spending and holding the line on public sector contracts ahead of the May 30 provincial vote.

“We certainly have to take the updated revenue numbers as we get them,” said Casey.

The Finance Department said total revenues were up $62.3 million to $11.23 billion mainly due to higher than expected amounts from cost-shared federal programs and net income from government business enterprises.

The increase in revenue was partially offset by lower than expected tax revenue.

Taxation revenue was down $36.1 million mainly due to a decrease in personal income tax and HST. The drop is due to a decline in the labour force at a time when the economy expanded by just 0.9 per cent in 2016, similar to the pace of the previous two years.

A statistical breakdown shows the province gets about 50 per cent of its revenue from taxes, while another 31 per cent comes from various federal sources.

Total expenses were also up $40.2 million to $11.08 billion mainly due to university funding and costs for flooding last fall and winter snowstorms.

The province’s net debt also decreased by $121 million to $14.95 billion.

Casey said the overall numbers were an indication the government’s fiscal plan is working.

“I think the corner that we have turned is that we are living within our means, we can control our spending, and we can take any money that we have and invest it in what Nova Scotians want,” she said.

Major savings were realized through lower than expected departmental spending in areas such as health, where spending was $27.6 million lower than estimated due, officials said, to lower capital grants and delayed project spending.

Another $133.9 million in restructuring savings were realized because several unspecified government “corporate projects” were either delayed or not carried through with. Finance officials also said the savings had nothing to do with ongoing labour negotiations with public sector unions.

Tim Houston, the Progressive Conservative finance critic, had a different view of the higher surplus.

“They achieved that by ignoring issues in health care … they have been ignoring the state of our roads, which are terrible across the province, and they didn’t do $133 million worth of projects, which at one time they thought they needed to do and they won’t tell us what they are,” said Houston. “So there are a lot of questions.”

NDP Leader Gary Burrill also questioned the government’s fiscal priorities given the books are better than it has portrayed.

“In the face of the needs we have … particularly in health and also in education, it’s no time for the government to say, ‘Yeah for us we have put more money in the bank,'” he said.

The figures released Thursday showed more than $234 million in additional appropriations were made during the last fiscal year, including an additional $10.5 million for Acadia University.

The money included $7 million to cover a federal loan and an extra $3.5 million for the school’s operating grant.

Despite repeated questions from reporters, officials refused to say why the university asked for the extra cash, saying “Ask Acadia.”

Acadia president Peter Ricketts said the money, including the loan, was part of helping the school deal with a loss of about $7 million that resulted from changes to its operating grant made in 2008.

“It was at that time that Acadia had asked for some financial help to address that and that was originally done with the loan,” said Ricketts. “Following that, the request for help resulted in this $3.5 million addition to the operating grant on an annual basis for the last four or five years.”

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