The Nova Scotia government is forecasting their largest deficit ever for the 2025-26 fiscal year.
The projected deficit is more than $1.225 billion, an increase of more than $500 million since the 2025-26 budget was originally presented in February.
Finance Minister John Lohr says the government is keeping a close eye on it.
“It is concerning. But we know that we were elected in 2021 to fix health care. We see largely these costs being in the health-care sector, between seniors and long-term care and largely health. We are committed to meeting the needs of Nova Scotians,” Lohr told reporters Monday morning.
The province released an update on Monday that highlights the changes in the budget since it was tabled during the spring legislative session.
Overall, health care was the biggest driver of the increase, representing about 46 per cent of the budget now, the province said.
The Department of Health and Wellness spending increased by nearly $411 million to a total of about $6.39 billion.
Senior care was the second largest increase at nearly $60 million, followed by the Department of Communities, Culture, Tourism and Heritage at nearly $40 million.
Record-breaking deficit
The revised deficit projection is the largest the province has ever seen. But the biggest portion comes from a change in the province’s accounting books.
For more than 20 years, if a builder borrowed money from the government to create a Long-Term Care facility, it was recorded as a loan. The builders would have 25 years to pay it off with a fixed interest rate.
But the government is changing that designation, so the Long-Term Care facilities with loans will be set up as tangible capital assets, meaning those facilities will be considered a government asset for accounting purposes.
That change increased the deficit, although it was partially offset, by more than $490 million.
Technically, there was a deficit of $797 million in 2000, the province said, which if converted to current day money would cost more.
Growth slowing down
The government has recently projected they would run deficits in the last four budgets, Lohr said.
By the end of the 2024-25 fiscal year, for example, the province found they had run a surplus of $265 million.
Revenues are so far down by about $44.9 million compared to the estimate in the February budget, but revenue continues to grow, Lohr said.
Despite the pattern of surpluses, Lohr said the estimated deficit is still the best estimate they have right now.
“In terms of what we will see in December or at year end, you will have to wait, like I will have to wait, but this is the best and most accurate information we have right now,” he said.
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