Nova Scotia Issues Budget Forecast Update

first_imgThe province of Nova Scotia’s first forecast update shows the government’s fiscal plan for 2005-06 is on track, with a budget surplus of $69.8 million — up $6.5 million from the estimate in April. Of that surplus, $57.1 million is legislated to be applied directly to the outstanding debt of the province. Nova Scotia’s updated budget forecast includes an overall increase of $8.1 million in provincial source revenues, savings in debt-servicing costs of $12.4 million, and accounting adjustments of $8.7 million. These positive variances are offset by a forecasted increase in net program expenses of $22.7 million. “We continue to keep the province in a surplus position, as we have in years past,” said Finance Minister Peter Christie. “At the same time, we have also been able to make a significant payment on the province’s debt this year, and are undertaking several key investments to contribute to the long-term growth of Nova Scotia’s economy.” Offshore royalties are forecast to increase by $8 million due to the strong price of natural gas. Corporate income tax revenues are higher than budgeted by $11.1 million as a result of updated information from the federal government. These increased revenues are offset by a forecasted $2.6-million drop in motive fuel tax revenues, as high prices at the gas pump affect consumption. Also, HST revenues are expected to drop by $8.4 million based on updated projections for Nova Scotia’s share of the federal HST pool. Strategic investments in economic development initiatives, worth $14.3 million, represent most of the increased spending this year. There are also a number of smaller budget pressures due to unforseen expenses in a number of departments. “We will continue to manage the province’s finances prudently,” Mr. Christie said. “While a slightly higher surplus is a good thing, we expect there will be a number of challenges as the year progresses.” As of Thursday, Aug. 25, the full $830 million received in July from the government of Canada under the Offshore Offset Agreement had been used to retire government debt. This debt retirement and lower interest rates will cause total debt-servicing costs to drop by $32.4 million this year, of which $20 million was included in the spring budget. Nova Scotia has been recognized for its progress in financial management by two major bond rating agencies this summer. Dominion Bond Rating Service and Moody’s Investors Service both changed the trend on Nova Scotia’s long-term debt to positive from stable, which will help reduce borrowing costs. A copy of the forecast update is on the website at .last_img

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