Revenues Expected to go Down

An anticipated drop in revenues caused by the general economic slowdown throughout North America is prompting the Nova Scotia government to take measures to protect the province's fiscal plan.

"The job of balancing Nova Scotia's budget has become more difficult," Finance Minister Neil LeBlanc said today. "An anticipated economic downturn made the challenge tough enough. That challenge has been heightened by last month's events in the United States. Our revenues are expected to go down and we have to find ways to make up the difference."

In a message aimed at the business community, Mr. LeBlanc advised that the Large Corporations Tax, which would otherwise expire on March 31, 2002, will continue for at least one more year.

"The province collects approximately $45 million from about 1,040 companies paying the Large Corporations Tax," said the minister. "That's $45 million in revenue we cannot afford to lose at this juncture."

The capital tax was first applied five years ago to offset the gains accruing to businesses after the introduction of the HST.

The minister pointed out that governments across the country were bracing for a brief downturn in the economy. Those concerns were hastened and magnified by the terrorist attacks in the United States.

The federal government and many provincial governments have already made adjustments to their current budgets. While it is uncertain how Nova Scotia will be affected by the downturn, the minister said the time to act is now, especially considering the government is still planning to balance the budget in 2002-03.

Mr. LeBlanc said that all departments and agencies, plus all entities funded by the province, have been asked to review their budgets for the remainder of this fiscal year and target areas where savings can be made. About 70 per cent of the province's total program spending flows to health authorities, school boards, and many other agencies tasked with delivery of public services.

Over the past two years the Nova Scotia government has cut spending to a level that matches revenues. Efforts to date have reduced the operations deficit from $387 million in 1999-2000 to a forecasted $97 million in 2001-02. Nova Scotia's public service is smaller, by about 1,000 jobs, representing a payroll reduction of about $40 million. Some services and programs of government have been reduced or eliminated.

Mr. LeBlanc leaves today for Vancouver, B.C., where he will meet his counterparts at a federal-provincial finance ministers' meeting to discuss the economic slowdown and the effects of Sept. 11th on the economy.