Nova Scotia's minority government tabled a dull, take-no-chances budget Tuesday aimed at causing minimum offence as Premier Rodney MacDonald enters a potentially precarious third year in power amid an economic slowdown in the United States.

The $8.5-billion budget is balanced — for the seventh consecutive time — but it provides only a smattering of spending and marginal tax breaks for groups such as students, public transit riders and search-and-rescue volunteers.

All told, Nova Scotians will pay $105 million less in taxes, with about one-third of that coming from a previously announced decrease in corporate taxes.

The province's finance minister, Michael Baker, said he had to take a cautious approach in his fourth budget.

"Our spending choices are strategic," he said in a speech to the legislature as the budget was tabled. "They are prudent."

Baker noted that Nova Scotia's most important exports, including fish, forest products and natural gas, are mostly being sold to a struggling U.S. market and the strength of the Canadian dollar hasn't helped.

"Nova Scotia exports will face challenges from the U.S. slowdown, exchange rates and pressures from rising energy and wage costs," he said.

Meanwhile, corporate profits are expected to fall, and the population will decline, resulting in a decrease in transfers from Ottawa. The province expects to get 34 per cent of its budget from federal sources.

Faced with a sputtering Canadian economy, the budget is mainly made up of previously stated goals, including:

• helping students
• struggling with rising debt
• improving rural internet connections
• providing an aging population with more nursing homes

Baker emphasized repeatedly the province's balanced budget, which was a pre-condition for the support of the third-party Liberals.

However, the modest spending commitments mean the province's debt will shrink less than one per cent to $12.3 billion — that's more than $13,000 for every person in the province.

Minority government will survive, Macdonald says

The release of the budget marks almost two years since MacDonald won a reduced minority mandate that has been marked by consistent acrimony with the Opposition NDP and a gradually deteriorating relationship with the Liberals.

The premier has already said he expects his government — the second minority government to lead the province since 2003 — to survive when the budget is put to a vote.

But the government's decision to tinker with a politically popular program that eliminated the provincial sales tax on home heating costs could prove to be a flashpoint in the legislature.

The program, introduced in 2007 with support from the NDP, provided a rebate on the eight per cent provincial portion of the HST. That works out to about $10 per month on the average heating bill.

The government plans to reduce the amount that can be claimed from electricity bills. The change means the province expects to spend $18 million less on rebates, with about 78,000 fewer households expected to qualify for the program.

However, the government is promising to replace the rebate by reviving the so-called Keep the Heat program, which provides $200 a year to families earning less than $25,000 annually — something for which the Liberals have been pushing.

The Progressive Conservatives have held power since 1999, with MacDonald taking over from former premier John Hamm in early 2006.

The government confirmed students will be able to begin borrowing directly from the province at lower interest rates starting in August. The first 20 per cent of those loans will be grants that average $775.

There will also be funding for 470 more spaces at community colleges, at a cost of almost $4 million, while there's close to $1.9 million to reduce Grade 4 class sizes and fund math mentors.

Some of the budget's announcements, such as funding 1,000 new, long-term-care beds, hearken back to the previous election campaign.

Rural Nova Scotia — a key to the Tories' potential electoral success — will receive $18.6 million for better high-speed internet connections.

As well, there are plans to pour money into the province's crumbling highways, schools and buildings, in "tangible asset" spending that will eat up almost $150 million of the $189 million projected surplus.

Nova Scotia and Newfoundland were the last of the provinces to introduce budgets this year.