New Brunswick government's projected surplus skyrockets
Province projects surplus for 2021-22 of $487.8 million
The New Brunswick government's projected budget surplus for the current fiscal year has skyrocketed to almost half a billion dollars.
The Higgs government is spending more than expected but is also raking in far more revenue than anticipated, producing a projected surplus for 2021-22 of $487.8 million.
According to a third-quarter fiscal update from Finance Minister Ernie Steeves, the financial windfall includes:
- Harmonized sales tax revenue that is $293.8 million more than expected.
- Personal income tax revenue $193 million higher than expected.
- Corporate income tax $160 million more than in the budget
- Federal transfer payments $131.9 million higher than expected.
In his provincial budget last fall, Steeves projected a deficit of $244.9 million this year.
But a faster-than-expected economic rebound has led to more spending and more revenue from taxes on everything from property sales to retail purchases to gasoline.
Employment was up 2.5 per cent in 2021 while wages and salaries in the first three quarters of the year were 7.8 per cent higher than in 2020.
The province is spending more than planned because of COVID-19, new labour contracts with public-sector workers and a new child-care agreement with the federal government designed to lower costs for parents.
But those extra expenses were more than offset by the flood of additional revenue.
Assistant deputy minister Peter Kieley told a media briefing that the $832 million variation from revenue projections last year was "unprecedented by New Brunswick standards."
He said the federal government, which administers HST and corporate income taxes for the province, recently provided new calculations showing the "national revenue pool" is larger than expected.
The province's population growth also meant that per-capita federal transfers increased.
Steeves warned that some of the windfall from federal COVID spending isn't expected to last, and that means he's not willing to spend the surplus.
"We can't expect to have this level of revenue growth in all future years," he said.
But he said the government is "strongly considering" reducing property taxes on rental properties.
"Folks, this is going to happen, hopefully this year," he said.
Asked why the province wasn't passing on some of the one-time revenue to New Brunswickers in the form of one-time spending, Steeves said the government only recently found out about the extra federal transfers and "quite frankly is not nimble enough to do business that way."
Opposition Liberal finance critic Rob McKee, who predicted during the last fiscal update that the surplus would grow, said the province should do its homework and find a way to use the extra revenue to help people.
He said doctor and nurse recruitment efforts, mental health programs, small- and medium-size businesses, the tourism and cultural sectors and long-term care homes would all benefit from more funding.
"New Brunswicks are struggling right now to get by," McKee said. "This government is demonstrating no compassion, no social conscience to help New Brunswickers."
But Renaud Brossard of the Canadian Taxpayers Federation said with interest rates expected to rise this year, the Progressive Conservatives are right to run big surpluses and pay down debt to reduce what they have to spent on interest payments.
"Paying back the provincial debt, as the Higgs government has been doing, protects taxpayers against these high costs."
The huge surplus means the province's accumulated net debt will drop by $470 million this year, to just below $13 billion.
That in turn will shave another $16 million off the interest payments the province must make each year on that debt.
The province is spending $25 million less on health care so far this year in part because COVID-19 has delayed the launch of new programs.
The pandemic has also allowed the Department of Social Development to spend $40 million less, in part because federal COVID support programs have allowed the department to spend less on social assistance.
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