Province Forecasting Higher Surplus, Tight Budget

The province is forecasting a higher budget surplus for 2007-08, with more funds earmarked for debt reduction.

However, the unallocated surplus - the amount available to cover spending and revenue pressures for the rest of the year - has declined to $2.3 million, down from $15.4 million budgeted.

"We will continue to face budget pressures in the last quarter of the fiscal year," said Finance Minister Michael Baker. "There is very little room to cover any other negative changes in our budget."

The total surplus is now forecast to be $139 million, $20.6 million higher than the $118.4 million budgeted. This includes a legislated $68.2 million for the offshore offset and an additional $68.4 million to be applied to the debt.

The total amount to be allocated to the debt is forecast to be $136.6 million.

"We are very firm about meeting our commitment to reducing the debt this year," said Mr. Baker. "However, there's no doubt it's a challenge to find the money to do it."

Overall, the province is forecasting a $72.4-million rise in total revenues, including net income from government business enterprises, to $8.1 billion. Higher revenues from offshore forfeitures and personal income taxes are offset by lower revenues from petroleum royalties.

Total expenses are forecast to increase $46.5 million to $8 billion. Pension expenses are increasing and additional spending is required to cover key program areas and infrastructure. These are offset by a decline in debt-servicing costs, now forecast to be $931 million.

Nova Scotia's real gross domestic product for 2007 is forecast to be 1.6 per cent, down from the budget estimate of 2.3 per cent, as a result of lower consumer spending and a decline in business investment.

Mr. Baker said government departments will have to watch spending carefully for the rest of the year to ensure the province maintains the surplus required to reduce the debt.