Big bank sees $1B hole opening up in N.B. budget
Provincial finance officials haven't updated budget estimates, but Bank of Nova Scotia predicts $1.19B deficit
New Brunswick may be headed for an historic $1.19-billion budget deficit because of the COVID-19 crisis, a country–mile wide of the $92.4 million surplus projected by the province in March, according to a new assessment by the Bank of Nova Scotia.
On Monday, the bank's senior economist, Marc Desormeaux, published an analysis of the impact the pandemic is likely to have on each province's budget. He concluded seven provinces, including New Brunswick, will spill record amounts of red ink this year and blow through all–time–high debt and deficit levels.
"Only Saskatchewan and Nova Scotia are likely to avoid record deficits," wrote Desormeaux. "Those province's plus Newfoundland and Labrador should be the only ones not to carry all time high net debt burdens."
New Brunswick has not issued a fiscal update since Finance Minister Ernie Steeves presented a budget to the legislature in March.
The province acknowledged the estimates presented in that document have been wrecked by economic damage caused by the COVID-19 virus, but it has not yet offered more realistic numbers in their place.
Nearly a month ago, Premier Blaine Higgs announced finances were looking bleak.
"We are certainly now in very significant deficit territory," he said April 16.
On Tuesday, Vicky Deschênes, a spokesperson for the Department of Finance, once again would say only there has been a "significant" effect on finances by the pandemic.
"It will take some time to determine the impact this situation will have on our finances," said Deschênes in an email to CBC News.
"The Department will provide an economic and fiscal update at an appropriate time."
The provincial government is required to provide a first-quarter update on its budget, including its likely deficit, but not until July. Opposition Leader Kevin Vickers said that is too late and has called for one to be delivered immediately.
"We're encouraging the legislature to reopen and one of the first agenda items we see is a financial update so New Brunswickers can see exactly what our situation is and options as to going forward," said Vickers in an interview.
According to the Bank of Nova Scotia, New Brunswick is spending the least amount of any province on supplementing federal economic recovery efforts. Vickers has called for that to change but will not give an amount he believes the province should commit to a recovery.
He said that needs to be debated but not until the province provides reliable information on how difficult its current financial situation has become.
The largest budget deficit ever recorded in the province was $895.7 million, 21 years ago.
Tolls established on the Fredericton to Moncton highway were cancelled by the newly elected Progressive Conservative government of Bernard Lord in 1999, forcing the project's entire cost onto the province's books at once.
More recently the former government of premier Shawn Graham slashed provincial income tax rates in 2009, helping to generate a $695.2 million deficit in 2010.
Desormeaux projected the current deficit will be $500 million higher than that 2010 amount this year.
Estimates from others have been less pessimistic but have also tended to deteriorate over time.
Two weeks ago, the Royal Bank of Canada projected New Brunswick would run a $600-million deficit this year, but it later determined the province's economic troubles to be deeper than earlier thought.
On Monday, RBC lowered its estimate of economic growth in New Brunswick to -5.6 per cent for the year from its April estimate of -4.5 per cent. It has not yet adjusted its deficit projection to match.