One-time financial adjustments and a faster return to more normal life during the pandemic have helped bring about a dramatic shift in Nova Scotia's budget outlook for this fiscal year, increasing expected revenues by $1 billion.
Finance Minister Allan MacMaster released the government's December fiscal update for the 2021-22 year on Tuesday and it shows the province in a surplus position of $108 million. That's a major improvement from the budgeted deficit of $553 million last March and better still than the September update forecasting a $445-million deficit.
"The way Nova Scotians have responded to the advice of Public Health in this province has made a huge difference in the revenue numbers we're seeing here today," MacMaster told reporters during a telephone briefing.
Finance Department officials point to increased home sale prices, a return to pre-pandemic levels for exports, consumer spending and employment, and some one-time adjustments as the drivers of the turnaround.
What accounts for the change
Key revenue factors include:
Personal income tax is $225 million more than expected in the budget (it's up $123 million from the September update).
HST revenue is up $111.5 million from the time of the budget (it's $116.5 million higher than the September update).
A prior year adjustment of $346 million to account for better-than-expected corporate and personal taxes and HST in the 2020 taxation year.
Increased federal transfers of $206.6 million, $111 million of which comes via a boost in the federal health transfer following a revised population estimate for the province.
It all adds up to revenues of $1 billion more than budgeted last March.
Numbers won't impact budget deliberations
MacMaster said much of what is reflected in today's numbers represent one-time changes, and so the situation will not have an effect on how he and government officials assemble the upcoming budget for 2022-23.
"We're not expecting to see these kinds of pleasant surprises going forward," he said.
Still, opposition politicians called on the government to do more in the short term for those most in need.
Liberal finance critic Kelly Regan noted the support program for small businesses the government announced last week doesn't actually open for applications until January.
More help now
"I'm calling on them to give wage subsidies to places like restaurants who could continue to employ workers if they would only step up," Regan said in an interview.
"This is about helping people who need help right now, the week before Christmas. They knew they had this money and they're taking forever to roll out the business support."
NDP finance critic Lisa Lachance suggested the increase in personal tax revenue could indicate more flexibility for the future, but also said there are immediate needs for the government to address, including income and disability support payments, housing support and paid sick leave at a time when so many people are home waiting for COVID-19 test results.
"It's particularly relevant since we're really in the middle of something pretty extraordinary," Lachance said.
MacMaster said the government would continue to be responsive.
"We are going to be compassionate and focused on helping to minimize the impact on this pandemic so that businesses can continue to move forward and continue to be here with us long into the future."
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