Finance Minister Graham Steele. (CBC)

Nova Scotia's first NDP government plans to spend $9.1 billion in 2009-2010, a nine per cent increase from the last fiscal year, which rang in at $8.5 billion.

In his budget address Thursday, Finance Minister Graham Steele said the budget keeps promises made by the previous Progressive Conservative government and introduces some new spending by his government.

"While it is the first budget tabled by this government, we do not consider it to be our budget," he said. "While the budget has been shaped by the past, it also signals a new direction for the future."

Steele said the deficit is forecast to be $592 million for 2009-2010, partly because $341 million in university funding will be paid out this fiscal year.

"Our economy is just emerging from a global downturn," he said. "While we were fortunate that we fared better than many other jurisdictions, far too many Nova Scotians felt the pain of job loss and the fear of an uncertain tomorrow.

"We will not add to that anxiety by making drastic cuts to programs and services."

The province's net debt is now projected at $13.5 billion, up from $12.3 billion.

Decrease in revenue

"The second-largest factor in this year's deficit is a decrease in revenue of $125 million since May 4," Steele said.

The revenue decrease is a result of several factors including petroleum royalties falling by $45 million, mainly because of a decrease in natural gas prices, personal income tax declined by almost $29 million, and harmonized sales tax went down by $19 million.

On May 4, the Tory government tabled its budget and forecast a $4-million surplus for the fiscal year.

The third reason for the large deficit, Steele said, is the previous government’s failure to include funding or adequate funding for a number of programs such as increased wages for several hundred staff who were converted to permanent status.

The government will set aside $13 million more to the Industrial Expansion Fund, for a total of $33.2 million, and $81.3 million to fund land purchases and improvements.

Steele said the NDP government plans to spend $31.8 million to live up to commitments it made during the election. That includes removing the provincial portion of the HST from basic home electricity starting on Oct. 1, at a cost of $15 million.

Steele said the government will offer new home construction rebates at a cost of $10.5 million.

The government also plans to spend $796 million to build and repair roads and bridges, schools and health-care facilities and housing. Of that, $325 million will be spent on highways.

Interim Progressive Conservative leader Karen Casey speaks with the media on Thursday. (CBC)

Interim Progressive Conservative leader Karen Casey said the NDP failed to seize the moment.

"You have to make some tough decisions. Premier [Darrell] Dexter did not make the tough decisions that Nova Scotians were expecting him to make," she said.

Savings found

Savings of $13 million have been found, Steele said.

One program saving was achieved through construction delays in opening long-term beds, for a saving of $4.3 million. The $2-million rink revitalization program has been cut.

"We will take a common sense approach to expenditure management, beginning with ourselves. In this fiscal year, we will realize $800,000 in saving with a smaller cabinet and fewer political staff," Steele said.

Allocations to departments include $3.4 billion to the health department and $1.7 billion to the education department.

"We will set a course today that ensures a more secure future, a brighter tomorrow," Steele said in his address.

"We will need a strategic, disciplined approach as we move forward … The task is not an easy one. We must be prepared to examine every policy option open to us to meet the fiscal challenges."

Steele reassured public sector unions that the government would bargain in good faith, with an eye to being fair to both employees and taxpayers.

"In many ways, this budget marks both a beginning and an end. It ends the imprudent fiscal management we have seen in recent years," he said. "It begins an era of genuine leadership."