Nova Scotia Issues Budget Forecast Update

The government of Nova Scotia's first forecast update for 2004-05 shows the province is on target to balance the budget this year, with a slightly higher surplus projected.

Finance Minister Peter Christie said higher projected revenues overall will help cover budget pressures caused by the recent wage settlements in the Capital District Health Authority and by new government investment in job creation at the Office of Economic Development.

"Our budget plan is unfolding largely as expected," said Mr. Christie. "Most categories are unchanged, and the pressures identified are manageable within revenues projected at this point."

Based on information available in early September, the government is forecasting a surplus of $2.3 million in 2004-05, up $158,000 from the estimate in April.

Expenditures are forecast to be $7.74 million higher than originally estimated. The arbitrated Capital District Health settlement will have a maximum impact of $3.86 million more than budgeted, depending on the number of workers who qualify for additional salary adjustments under the arbitration award. The government has also made strategic investments in job creation across the province, worth about $4.5 million more than budgeted.

Net revenues are forecast to go up by $7.9 million, with offshore forfeitures driving the increase.

Mr. Christie noted that the variances are small, given the government's total spending of more than $5.5 billion in 2004-05. However, careful budget management continues to be essential given Nova Scotia's fiscal and economic challenges, he said.

"It is early in the year, and we have to be careful to stay the course," said Mr. Christie. "If wage settlements continue to be more generous than expected, we will have to look to reducing program spending to pay for them."

He noted the forecast update does not include potential changes to federal funding for health care and equalization that may result from federal-provincial negotiations underway.

The latest economic forecast for Nova Scotia projects growth in real Gross Domestic Product for 2004 to remain the same as the budget forecast at 2 per cent. Consumer Price Index inflation is also on track with the budget forecast of 1.5 per cent in 2004.

All three major international ratings services have increased the province's credit rating in the last year in recognition of the government's efforts to achieve balanced budgets.

A copy of the forecast update is on the website at www.gov.ns.ca/finance/ .