Nova Scotia generated $144M surplus last fiscal year; budget predicted $279M deficit

As the Nova Scotia government announced it ended the last fiscal year with a surplus of nearly $144 million, opposition parties called for changes to spending practices that allow the governing party to approve extra spending without oversight from the legislature.

Nova Scotia's public accounts, released Friday, showed that for the fiscal year ending March 31, 2024, the province generated $422.5 million more in revenue compared to what was originally estimated in the budget. Nova Scotia ended the year with a surplus of $143.6 million, when government had predicted the year would end in a deficit of $278.9 million.

The financial documents show that the surplus is due to higher-than-expected income and sales tax revenue, net income from government business enterprises, and federal transfers.

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Government revenues were $16.5 billion, a rise of $1.1 billion or 6.9 per cent higher than what was budgeted. Total government expenses were $16.4 billion, a rise of $643 million or 4.1 per cent higher than the original estimate, with extra spending on health care, housing, affordability measures, and response to extreme weather events.

Net debt was $18.5 billion at the end of the fiscal year, $772.7 million higher than the previous year.

Finance Minister Allan MacMaster said the government targeted the increased spending on people who needed it the most.

"With this focus, we are helping some of the most vulnerable Nova Scotians who have been affected most by circumstances beyond their control," MacMaster told reporters Friday.

He says the government's predictions were wrong and that the province found itself in a surplus instead of an expected deficit because of "prudent" budgeting. The surplus for fiscal 2023-24 represents the third time in a row that government finances turned out to be in the black despite original estimates they would be in the red. The province projected a deficit of $467,385 for the 2024-25 year.

"We depend on our assumptions going into the budget in the springtime and don't just pull those numbers out of the air," he said. "We consult, we have a forecast challenge with the big Canadian banks and leading academic institutions and economists, and we will change our assumptions at the time."

"I think Nova Scotians would want to know that their government is being prudent."

But the public accounts also show that the government spent about $1.3 billion that wasn't first approved by the legislature. These "additional appropriations" as they are called, are permitted by the province's Finance Act -- the only legislation of its kind in Canada that permits this type of spending.

It's not clear from the documents exactly where the funds for additional appropriations come from. In a December 2022 report, Nova Scotia's auditor general Kim Adair accused the provincial government of lacking accountability and transparency for its spending that isn't subject to review, or vote of approval by the legislature. As for the cabinet orders making that spending possible, Adair cited an example from Sept. 29, 2021, which included a murky reference to "supplemental sums."

NDP finance critic Lisa Lachance said the NDP is "very concerned" about the additional spending and MacMaster's so-called prudent approach. Lachance said the Progressive Conservatives underspent on key areas like health care and housing, adding that the government should have consulted more widely instead of adding to a "laundry list" of appropriations throughout the year that weren't reviewed by the legislature.

"There are ways in which we could do things differently and better in terms of transparency in terms of the input of all the elected officials in the province and members of the legislature," Lachance told reporters.

Liberal Leader Zach Churchill said the final spending numbers for the last fiscal year are evidence that the Tories can and should cut HST in the province -- currently at 15 per cent -- because the government continues to "rake in record highs" in taxes.

The Progressive Conservatives estimated in the 2023-24 budget that the government would collect about $4.5 billion in income tax and $2.9 billion in sales tax; instead, it generated $4.9 billion in income tax and more than $3.3 billion in sales tax.

"The government is being irresponsible with the public purse," Churchill wrote in a press release, which also accused the Tories of showing no signs of stopping their practice of spending billions in additional appropriations each year.

This report by The Canadian Press was first published July 26, 2024.

For more Nova Scotia news visit our dedicated provincial page.