Finance Minister Graham Steele says the surplus is artificial. (CBC)

Nova Scotia is now on track for a surplus this year, but even the government is downplaying the financial good news.

In a financial update released Wednesday, the provincial government forecast a $97-million surplus for 2010-2011. The intial projection was a deficit of $222 million.

Factors that contributed to the projected surplus include higher HST and income tax revenues, government spending on, or under, budget and some one-time events.

"Although we are making genuine progress, Nova Scotia has not yet turned the corner," said Finance Minister Graham Steele.

Steele suggested the surplus is artificial.

Due to an accounting maneuver, spending on universities this year was recorded on last year's books. That means Nova Scotia will go back into deficit when university spending appears on next year's budget.

"The province still anticipates a deficit next year in the range of $370 million," Steele said.

That deficit is expected to result even with $250 million in planned spending cuts, wage restraint and budget cutting exercises such as a proposed 22 per cent cut to school board budgets over the next three years.

'Momentary' good news: critic

Liberal Finance critic Leo Glavine is not impressed with the surplus.

"We are close to 10 per cent unemployment in Nova Scotia; this is a real concern for our province," Glavine said. "Fifteen hundred jobs lost in the last two months."

Glavine said that trend offsets any "momentary good news."