Federal COVID funding drives up New Brunswick budget surplus to $89M
Finance Minister Ernie Steeves says circumstances are unique, so he's not spending the surplus
New Brunswick continues to reap the benefits of increased federal government funding and a booming pandemic recovery to pad its budget surplus and pay down debt.
The province is now projecting an $89.1 million surplus for the current 2021-22 fiscal year.
Finance Minister Ernie Steeves says the unique circumstances, including economic growth of 3.7 per cent over last year as spending rebounds, are temporary and that's why he's not spending the surplus.
"The pace of growth that we're seeing this year is temporary and not really sustainable," he said Tuesday. "We can't rely on the temporary COVID-related measures that are influencing our current revenue growth."
Federal spending on COVID-19 measures included $103 million for health care, including money to support vaccinations, and $45.1 million for stimulus spending on construction projects.
Other federal money that didn't flow directly into the provincial treasury went to New Brunswickers who had more money to spend, boosting harmonized sales tax revenues $84.6 million over what Steeves was forecasting in his March budget.
"That's where a lot of the HST and tax revenue came from," he said. "People were out spending money, but they were staying home, staying around New Brunswick and spending it here."
The province also saved money thanks to delayed surgeries that will eventually be rescheduled and will have to be paid for, Steeves said.
CUPE wage increases factored in
Federal transfers are now projected to be $93 million more than budgeted back in March. Total revenue is expected to be $487 million higher than forecast, while total spending will be only $153 million higher.
The $89.1 million surplus is an even rosier projection than the one contained in the first-quarter update in October, when the surplus was pegged at $37.7 million.
But it's lower than the $200 million to $300 million surplus Higgs was talking about just a couple of weeks ago.
That's because it now incorporates the expected cost of new contracts with unionized public-sector workers. Members of the Canadian Union of Public Employees are voting this week on tentative agreements struck with the province on the weekend.
Steeves wouldn't say precisely by how much the wage settlement is lowering the surplus.
"We budgeted some toward their back pay, their retroactive pay, but those numbers still have to be finalized, and quite frankly the deal still has to be finalized … so we're a little ahead of ourselves on that right now."
Liberal finance critic Rob McKee said he believes continuing federal funding and economic growth will lead to a much larger surplus than $89 million, and the Progressive Conservatives are concealing that reality so they can say no to extra spending.
"You need to address certain issues before you go to the bank with $400 million," he said, referring to last year's surplus.
McKee said sectors such as housing and mental health services need more funding.
"We need to use the money that we have to address those issues."
But he wouldn't say what an appropriate surplus would be.
"It's not one magic formula with a specific number. We have to take a balanced approach. Yes, we need to pay down some debt, but we also need to take care of New Brunswickers at the same time."
The second-quarter update does not account for potential funding or spending from a possible child-care agreement with the federal government.
Originally, Steeves budgeted a $244.8 million deficit for this year.
The surplus and other fiscal changes to capital spending knocks another $304 million off the province's accumulated debt, lowering it to a projected $13.4 billion. The province will spend $13 million less than expected on interest payments on the debt as a result.