Premier Darrell Dexter has repeatedly warned that tough decisions lie ahead. (CBC file)

Nova Scotians can expect taxes to rise and programs to be cut as part of the NDP government's fiscal plan.

Those two strategies, along with spurring economic development, must be considered because of the province's dire finances, Premier Darrell Dexter said Monday.

Dexter also said he won't be able to balance the books next year, despite vowing to do so while on the campaign trail last spring.

"We don't have the money to pay for the services we deliver," Dexter told reporters in Halifax.

"We are going to keep the commitment to balance the budget. What is changing today, of course, is the timeline in which this can be achieved. Do I wish it was otherwise? Of course I do. But there are economic realities that we are faced with today that we did not know six months ago."

Dexter was responding to the recommendations of a panel of economic advisers, released last Friday.

The four-person panel, which Dexter appointed in August, urged the government to forget about eliminating the deficit until 2012, saying that introducing a balanced budget next year would further damage a weak economy.

Instead, it said, the NDP should consider raising income taxes and hiking the harmonized sales tax by two percentage points, with protection for low-income families.

The panel also suggested making cuts to government programs, but advised that any cuts should be made selectively over three to four years. In addition, it said measures were needed to spur economic growth.

Nova Scotia is in "serious financial trouble," the panel concluded.

The NDP passed a deficit budget this fall, blaming the projected $592-million shortfall on the previous Progressive Conservative government.

But Liberal Leader Stephen McNeil said the NDP knew about the province's dire financial state when it was in opposition. He accused the New Democrats of misleading the public and demanded an apology.

"They need to come out and tell Nova Scotians that five months ago they misled them because they were more concerned about gaining power," said McNeil.

Progressive Conservative finance critic Cecil Clarke accused the government of hiding behind the consultants' report.

"The minister and the premier now know the decisions they're going to have to make to present Nova Scotians with a budget this spring," he said. "They failed to present that today."

No specifics

Dexter isn't spilling any details about his government's plan. He won't say what taxes will rise, only that the options outlined by the panel are under consideration and no single approach will work on its own.

Finance Minister Graham Steele isn't saying whether the HST will be hiked as the panel suggested.

"It's an option that's on the table," Steele said. "It's too early to rule it in or rule it out. We'll certainly be looking at it."

Provincewide public consultations are set to begin in January. The NDP is creating a committee that will include representatives from both business and labour.

The government is also implementing a two-year review of all spending on government programs and services.

With files from The Canadian Press