Province Has Balanced Budget in Sight

Nova Scotia's Finance Minister Peter Christie said today, Dec. 19, that with continued "strong management" the government has another balanced budget in its sights.

Calling 2003 "a year of challenge and achievement for Nova Scotia," the finance minister noted that in the past nine months provincial income taxes have been cut while spending on health and education increased significantly.

Over the same period, parts of the province experienced the worst flooding in decades, the worst storm in a century, and farmers struggled with the financial fallout from the discovery of a single case of bovine spongiform encephalopathy (BSE or mad cow disease) in Alberta.

"Nova Scotians can take pride in the fact that we collectively met the extraordinary challenges of the past year. We can also take comfort in the fact that, as a province, we are now in a better financial position to deal with those circumstances than we have been for many years."

"Relative to most other jurisdictions in the region, in the country and across North America, our financial performance this year will be favourable," said the minister.

The province's updated budget forecast shows a substantial improvement on the revenue side of the budget. The current forecast has provincial revenues within 0.1 per cent of the budget estimate. Mr. Christie called that a remarkable performance in a year of uncertain international, national and local economics.

The minister said the good revenue news was tempered by unexpected events. With three months remaining in the fiscal year a $21-million deficit is forecast, all but $3.5 million of which is directly attributed to natural disasters, most notably Hurricane Juan.

The minister said he is confident that by year end -- March 31, 2004 -- the government will have erased the $3.5 million shortfall, if not the entire $21-million deficit.

Thanks in large measure to the government's mid-year budget management plan, which reduced overall spending by $32 million, spending is just 0.3 per cent over budget, much of which can be accounted for in the response to Hurricane Juan, spring flooding and support for farmers dealing with the BSE-related financial crisis.

While clearly encouraged by the province's improving fiscal position, the minister sounded a cautionary note and delivered a "steady-as-she-goes" message on the future financial direction of the government.

"It is important, and instructive, for all of us to note that here, in the very early days of this province's financial recovery, a storm that travelled across the central mainland of Nova Scotia in a matter of hours, could literally blow our finances into the red," said Mr. Christie. "That tells us that we must continue on the financial course set by this government four years ago. That is, clear and few priorities for additional spending, sound management of every tax dollar and the determination to be a catalyst for continued economic growth."

The provincial balanced budget law requires the government to recover any year-end budgetary deficit in the next fiscal year. Expenditures caused by natural disaster are exceptions to the law.