Province revises COVID-ravaged deficit projection

New Brunswick is still heading for a huge budget deficit this year because of COVID-19, but a new projection from the provincial government shows the fiscal picture isn't nearly as bleak as it was early in the pandemic.

Second-quarter budget results now project a deficit of $183.3 million for the 2020-21 fiscal year, the Department of Finance said in a news release Thursday.

That's still far worse than the $92.4 million surplus Finance Minister Ernie Steeves projected in the budget he delivered March 10, just days before the coronavirus sent fiscal plans into a tailspin.

But the new deficit projection is an improvement on the $343-million deficit Steeves was looking at when he updated MLAs at a committee hearing in June.

That's in large part thanks to infusions of federal money.

At $647 million, revenue from conditional grants from Ottawa are almost double the $324.5 million Steeves was expecting in his March budget, because of various COVID-19 programs.

That means revenues are on track to be $40.3 million less than what was budgeted, rather than the $291.4 million shortfall that the province was projecting in the spring.

Projected spending is way up because of pandemic expenses, but the news release says the majority of it will be offset by federal COVID-19 programs.

The Department of Health is on track to spend $110 million more than planned, and the Department of Education and Early Childhood Development, which had to adjust schooling to reduce the risk of COVID-19 spread, is forecast to spend $46 million more than budgeted.

The province is still projecting that the provincial economy will shrink by 4.3 per cent this year, a forecast unchanged from the spring.