Deficit projected to hit $479M, budget shows

The New Brunswick government has tabled a three-year budget that shows a deficit of nearly $479 million in 2013-14, but Finance Minister Blaine Higgs says returning to balance by 2015-16 is still achievable.

The 2013-14 budget includes strategic investments to strengthen the economy, spending efficiencies and revenue initiatives, he said on Tuesday.

"There is no doubt that we are facing challenges in New Brunswick today," Higgs said, blaming "poor management decisions in the past" and the sluggish global economy.

"While we need to take action on our declining revenues, we will also continue to manage taxpayers dollars smarter and strengthen the economy today so that we can have a brighter future," he said.

Under the plan, the projected deficit will be reduced to $271 million in 2014-15 and $102 million in 2015-16.

But with improved economic growth and revenues, returning to balance by 2015-16 is still achievable, Higgs said.

The government isnt holding the line on spending in its third budget, as it promised to do last year.

Total expenditures are about $290 million higher in the budget than Higgs had committed to do in last years three-year budget plan.

Civil service sees squeeze

The government does, however, plan to manager human resources "smarter," said Higgs.

Wages and benefits paid to public service employees exceeds $2.4 billion and represents one of the governments largest expenses, he said.

The government remains on track to reduce the size of the public service by at least 500 per year through retirement and attrition through cuts announced last year, Higgs said.

In addition, the government will phase-out the retirement allowance for public servants, which currently costs about $52 million a year.

Management and non-union employees hired before April 1, 2011, will no longer accumulate the retirement allowance, as of March 31. Instead, they will be given the option of an immediate payout of their allowance or deferring payment of the retirement allowance until retirement.

"These changes to the retirement allowance will also be negotiated with public sector unions for bargaining employees," Higgs said.

An Attendance Management program will also be introduced to reduce sick leave usage by 20 per cent by March 31, 2015, resulting in savings of about $20 million.

"To ensure the long-term sustainability and appropriateness of the sick leave program, we must ensure it is used only when absolutely necessary," Higgs said.

An attendance at work committee and employee wellness committee will be struck to help achieve that goal, he said.

The government will also seek efficiencies by reviewing the usage and cost effectiveness of all government vehicles, with a goal of reducing expenses by 10 per cent, Higgs said.

He said there are about 3,800 vehicles currently in the system. "Do we really need that many vehicles in government?"

The finance minister also reiterated plans to sell the government airplane.

Revenue measures, estimated at $168 million, will also help realign revenues and spending, Higgs said.

Among them, personal income tax rates will jump by up to 33 per cent, depending on an individuals tax bracket, while corporate rates will increase by two per cent, effective July 1.

Tobacco tax rates will also increase by about 50 cents for a package of cigarettes, starting at midnight.