N.B.'s revved-up economy leads to projected surplus of $38M

A roaring revival of New Brunswick's economy and a boost in federal transfer payments have wiped away a projected deficit for the current fiscal year and now have the province looking at a surplus of $38 million.

The government now expects to rake in tens of millions more dollars than projected in income tax and sales tax from people returning to work and spending more money in the wake of the initial COVID-19 lockdowns last year.

Employment is up 3.9 per cent so far over last year and retail sales have jumped 22.2 per cent.

Ottawa's decision earlier this year to keep shovelling more money to the provinces to offset the impact of the pandemic also helped wipe away some of the red ink.

• Month-long delay of New Brunswick's fiscal update 'surprising,' says economist

Progressive Conservative Finance Minister Ernie Steeves projected a $244.8 million deficit when he delivered his budget in March.

Among the changes to its projections based on first-quarter figures from April to June:

• Revenue from personal income taxes is now expected to be $72 million higher.
• Harmonized sales tax revenue is forecast to be $48.6 million higher.
• Transfer payments for health care will be $82.2 million above what was budgeted in March.

Those increases and others total $241.6 million, and combined with slightly lower spending levels erased the deficit and led to a surplus of $37.7 million.

Steeves cautions not to expect big wage increases

But Steeves warned during a news conference Wednesday that the brighter outlook would not necessarily allow the Higgs government to give unionized public-sector workers the big wage increases they're demanding.

"This [surplus] is about the federal transfers," Steeves said. "Without them we wouldn't be in this situation. We can't count on them going forward, though. This is one-time funding."

But Canadian Union of Public Employees New Brunswick president Stephen Drost said more of it should have found its way to some of the workers he represents,who have been without contracts for several years.

"Those additional monies coming into the province were to go to the front-line workers fighting the pandemic, not to clean up financial mismanagement by government," he said.

• All CUPE locals in wage talks with province vote overwhelmingly to strike

Officials said $148 million of this year's projected revenue comes from one-time increases for COVID-19.

But Drost said there's "all kinds of money" in the province and the government is choosing not to spend it on wages for workers.

"It's just not going to the people, or the people who are serving the people," he said.

Ten CUPE locals have voted to strike after negotiations ended with the province in early September. At the time, Premier Blaine Higgs said the province could not afford to improve its wage offer.

Drost invited Higgs to return to negotiations and said Wednesday the premier has not responded.

The province also released final audited statements Wednesday for the 2020-21 fiscal year, showing a higher-than-expected $408.5-million surplus.

That's a turnaround from a projected $13 million deficit projected for last year.

The two surpluses over two years mean New Brunswick's accumulated net debt is now expected to be $13.4 billion, $700 million lower than the $14.1 billion projected in March.

Liberal finance critic Rob McKee said Higgs should be using some of the additional revenues to address staff shortages and other problems in health care.

Given the two surpluses, "I just can't see how we can justify to New Brunswickers doing so little on those issues," he said.

Steeves said the ephemeral federal funding is also why he won't move ahead with some promised tax cuts, including reducing the provincial portion of property taxes paid on secondary properties, that the government postponed when the pandemic began.

"The promise was that we were putting it on hold until we were fiscally able to," Steeves said. "Yeah, at first blush it looks like we're fiscally able to, but we've got to see what's going on with COVID."

He said the current fourth wave of cases driven by the delta variant means the province's finances remain volatile.

"Right now, I am certainly not going to add any new taxes but I certainly can't reduce any taxes either at the moment."