A three-year plan to eliminate New Brunswick's deficit without raising taxes outlined in last year's provincial budget may be left in tatters on Tuesday as Finance Minister Blaine Higgs delivers the Alward government's 2013-2014 spending plans.
Higgs has been hinting that tax increases are likely on the way to fight an estimated $411-million deficit and free up money for new spending, abandoning confident predictions made just last year that more revenue was neither required nor desirable.
"We think New Brunswickers are paying enough tax," he told reporters during his 2012 budget press conference.
"If we just put revenue to it [the deficit] you just pour it down a black hole and we'd be in the same problem three or four years down the road because nothing structurally fundamentally will have changed within the system," he had said.
But during pre-budget consultations held across the province this winter, Higgs began expressing a contrary opinion, saying there was no way to close the budget deficit without raising taxes.
"We can't just reduce our expenses to balance our budget," he told a public meeting in Moncton in February.
Budget target will be missed
Higgs also hinted there was no way to balance the books quickly even with an injection of new revenue and said he was abandoning plans detailed in last year's budget to eliminate the deficit completely by 2015.
"Getting back to a balanced budget in the next two years is not in the cards," he said.
That raised the possibility new revenue is needed not just to close a fiscal gap, but also to fund new programs — an issue Tuesday's budget should also resolve.
The Alward government has millions of dollars in promises yet to keep from its 2010 platform and is facing a general election in 18 months.
It has already committed itself to a universal prescription drug program for the uninsured that is not yet funded and has been hinting that a major highway project between Shediac and Bathurst in eastern New Brunswick may be undertaken.
Higgs has made it clear he feels that would be a mistake.
"We may be building [roads] beyond our means," Higgs told a pre-budget meeting in Saint John in January.
"Our expectations are well beyond our means."
Last year, Higgs predicted a $183-million budget deficit for the fiscal year ending March 31, 2013. He then proposed to lower the deficit to $99 million next year and generate a surplus of $6 million 2014-2015.
However, this year’s deficit is now expected to hit $411 million with revenues lower, and expenses higher than expected.