The Nova Scotia government plans to run a deficit this year as it squeezes departments in order to find money for university students and rural health.

The New Democrats introduced a stand-pat budget on Tuesday, essentially freezing government spending for 2011-12 while revenue remains flat.

Finance Minister Graham Steele said Nova Scotians don't want deep cuts in services or rampant spending.

"The important thing is that for every new program that we're implementing we are reducing spending somewhere else in order to pay for it," he said.

Department spending is about the same as last year, with an extra $323 million to reinstate funding for universities. The budget for health — the biggest expense — remains at $3.7 billion. Education drops slightly to $1.1 billion, which means school boards must absorb at least $17 million in cuts.

Thanks to last year's HST hike of two percentage points, the government expects to bring in $344 million.

2011-12 Budget:

Projected revenues:  $8.5 billion

Projected expenses:  $9.3 billion

Projected deficit:  $389.6 million

Provincial debt: $13 billion

But with an expected $8.5 billion coming in and $9.3 billion going out, the NDP projects a deficit of nearly $390 million this year.

This comes after a surprise $447-million surplus for 2010-11 when the government was expecting a deficit.

"This year we had large, unanticipated one-time revenues. And that is the thing — they are one-time," said Premier Darrell Dexter.

Liberal Leader Stephen McNeil considers it all "a charade." He said Nova Scotians can't trust today's numbers anymore than the ones from last year.

"To plunge us from surplus into debt, to drive up our debt and to continue to go on with new program spending announcements, I think, is the wrong direction for our province," said Progressive Conservative Leader Jamie Baillie.

Student debt cap

The budget offers university students $8 million worth of debt relief through a new cap on the provincial portion of their student debt.

Once they complete a four-year program, they are expected to pay back a maximum of $28,560. Anything above that would be forgiven, though they would still have to pay back the federal portion of their debt.

There's $30 million for student bursaries. The tuition reduction of nearly $1,300 for Nova Scotians studying in the province will continue.

The government promises at least four collaborative care centres in rural areas to ease the burden on hospital emergency rooms. There's $1.5 million for more nurse practitioners and $2.6 million for work at Aberdeen Hospital in New Glasgow.

An estimated 4,300 low-income Nova Scotians will not pay income tax because of an increase in the basic personal exemption, which climbs $250 to $8,481.

Those on social assistance will get $15 more each month.

Other highlights include:

  • $14.5 million for jobsHere program
  • $4.4 million for eye drug Lucentis
  • Small business tax rate cut to 4%
  • $83.6 million for new schools in Bedford, Lunenburg, Yarmouth
  • $15 million to dredge Sydney harbour
  • $7.1 million for continued restorations to Bluenose II

Government departments will continue to have to find savings of at least three per cent, plus absorb inflationary costs. The NDP is reducing the civil service by not filling vacant positions.

The government expects to balance the budget in 2013.

With files from The Canadian Press