Nova Scotia's deficit is expected to increase to $277 million this year, $66 million higher than forecast last spring.
Finance Minister Maureen MacDonald gave an update on the province's finances Thursday.
She blamed the growing deficit on a soft economy and said personal income tax is forecast to come in $62 million lower than expected. Corporate and gas taxes are also coming in lower.
Government spending is forecast to come in $26 million under budget, and MacDonald said a balanced budget remains "the objective."
"It is a steep hill we have to climb. I am under no illusions," she said.