New Brunswick's projected deficit jumps to $411M

New Brunswick's projected deficit has now jumped to $411 million, more than 125 per cent higher than originally projected in March, Finance Minister Blaine Higgs announced on Thursday.

Up $54M over second quater report, finance minister says

New Brunswick's projected deficit has now jumped to $411 million, more than 125 per cent higher than originally projected in March, Finance Minister Blaine Higgs announced on Thursday.

The third quarter financial projection is up $54 million over the previous quarter.

This, despite decreased expenses.

"As expected, the slow global economic recovery is continuing to negatively impact revenues, and they are currently tracking almost $200 million less than projected," Higgs said in a statement.

"We need to look at new revenue options for the future so that we can address this shortfall and continue rebuilding our province's finances," he said.

Higgs has recently floated the idea of imposing a health-care levy, similar to ones used in Ontario, as a way to fund the health system.

He has also raised the idea of holding a referendum on whether to increase the Harmonized Sales Tax and impose highway tolls as ways to reduce the deficit during some recent pre-budget public consultations.

Other possible tax hikes being discussed include gasoline, tobacco, and other consumption taxes.

'Surprising' support for tax increase

Premier David Alward says he's been taken aback by how many New Brunswickers seem open to the idea of higher taxes.

"For me, it's been a bit surprising, quite frankly," he told CBC News on Thursday.

"I think there's a recognition of the challenges we face. There's also a recognition that services are important to us and we need to find ways to deal with it."

Alward says people seem to accept the government may have to increase how much it collects from them in an effort to balance the budget.

By law, any new tax, HST increase, or highway toll needs to be approved in a referendum.

Pre-budget consultations wrap up

Higgs released the third quarter results just as he was scheduled to wrap up his province-wide pre-budget tour with a meeting at St. Thomas University in Fredericton on Thursday night.

He said overall expense projections are expected to be $19 million less than the second quarter, despite an estimated $53-million increase in pension expense due to the adoption of new actuarial mortality tables, which were updated for the first time in a nearly a decade.

Personal income tax, corporate income tax, tobacco tax and royalty revenues are among the revenues down at third quarter, he said.

The Finance minister has painted a bleak picture of New Brunswick's deteriorating financial situation during the five previous pre-budget meetings.

"Even the modest growth we were expecting has not been materializing," he told Saint Johners.

In Moncton, he made it clear tax hikes cannot be avoiding by warning: "We can't just reduce expenses to balance our budget."

The premier had promised his government would balance the province's budget before the Progressive Conservatives' first term ends in two years.

But Higgs said last month the provincial government would not hit its target of balancing the budget in 2014.

Former Progressive Conservative Finance minister Jeannot Volpé has said the Alward government should have moved faster to cut spending.