Post-Secondary Education Minister Donald Arseneault, left, and Finance Minister Greg Byrne discuss the budget during a news conference on Tuesday. (Daniel McHardie/CBC)

The New Brunswick government is projecting a sluggish end to the recession, meaning balanced budgets are pushed farther into the future.

Finance Minister Greg Byrne's revised financial projections announced in Tuesday's budget are tacking on an additional two years to its plan to return the province's finances to the black.

Now the Liberals are now anticipating budget deficits will continue until 2014-15, instead of the 2012-13 date forecasted nine months ago.

In his budget speech, Byrne said he heard during his round of pre-budget consultations that citizens preferred deficits to funding cuts.

"The government has also made the conscious decision to return to balanced budgets over a longer period, rather than commit to sweeping reductions to programs and services," Byrne said in his budget speech.

"Once the province returns to balanced budgets, it will focus on reducing the province's debt."

Byrne said he would update to the current fiscal year's projections before the end of March and he may alter the 2010-11 budget "as warranted."

The finance minister told reporters at a news conference that the provincial government would not be running such large capital budgets in the future, which would restrain deficits in upcoming years.

Normally the budget is tabled in March, but Byrne said it was important to release the financial document ahead of schedule so departments could begin to plan on how to roll out the money early.

Deficits grow

Byrne is forecasting a $748.8-million deficit in his $7.9-billion 2010-2011 budget.

Revised budget estimates peg the province's 2009-10 budget deficit at $753.7 million, an increase of $12.8 million.

Last March, New Brunswick's deficit was expected to hit $741 million in 2009-10 and $738 million in 2010-11.

Those deficits could have actually been more severe if the province's projections for its pension shortfall had held true. In the previous budget, the government estimated it would lose $300 million annually on the pension markets.

Finance officials now expect to lose $200 million in 2009-10, $125 million in 2010-11, $75 million in 2011-12, $40 million in 2012-13 and $20 million in 2013-14.

Debt to hit $10B by 2012

The collection of deficits will push the province's net debt to $9.5 billion by March 31, 2011. That means the province's net debt-to-GDP ratio will hit 33.3 per cent by 2011, up from 25.4 per cent in the Liberals first full budget in 2007.

Using the finance department's projections, the province's net debt will eclipse $10 billion by 2012. By adding up the future projected budget deficits, the province's net debt will hit $10.9 billion at end of the 2013-14 fiscal year. The budget expects the debt will start being paid down in 2014-15.

The growing debt figures are also translating into higher payments to service that expense. The province will make $634 million in debt payments next year, which is the fourth-biggest expenditure in the budget after funding the departments of health, education, social development and the general government account.

Sluggish economy

The New Brunswick economy contracted by 0.5 per cent in 2009, according to the province. Byrne said his department is expecting the economic growth figures to rebound in 2010, giving the province a modest 1.7 per cent growth rate.

Economic expansion in the medium term is going to be "considerably lower" than the Liberal government's earlier estimates, Byrne said.

"Growth in the New Brunswick economy over the medium-term is projected to be more subdued largely due to the absence of major investment projects on the horizon, especially with the completion of the LNG terminal and pipeline in 2009 and the $8 billion Eider Rock petroleum refinery project not proceeding at this time," Byrne said.

"As well, we are confronted with a more gradual recovery than previously anticipated."