The province’s second-quarter budget update now projects a surplus of $774.4 million — an amount 22 times higher than the $35.2 million projected by Finance Minister Ernie Steves in the province’s budget in March. This reflects state revenues that are now on track to be $918.1 million more than projected. The flood of revenue includes $388.3 million in increased corporate income tax revenue and $317 million in higher personal income tax revenue — reflecting a strong economy and the province’s population growth. “More people working means more income taxes and more people spending as well,” Steeves told a news conference. Those figures correspond with $70 million worth of personal income tax cuts announced by Steeves last month, though they won’t be fully reflected until next year. Assuming the forecast holds, this year’s surplus will be just a hair short of last year’s record surplus of $777.3 million. That surplus fueled calls for the government to spend more on health care, housing and other needs. This year’s surplus will shave another $661.7 million from the province’s debt and reduce the province’s cost of interest payments to service the debt by another $25 million.
Vague plans for the use of the money
But the Progressive Conservative government has already signaled it plans to spend more money this year to help New Brunswickers struggling with higher costs of living due to inflation. Steeves would not say how he could spend or if there is a cap on how much of the surplus he would use for programs. “There is a plan for this,” he said. “I can’t reveal it today, but we are moving forward with a number of different plans. “Do we need some flexibility with our surplus to protect us from the coming recession? Absolutely. Do we need to help people right now? Absolutely. There are a lot of great ideas out there…and we’re going to act and get some of them very soon”. The update says spending increased $179 million more than budgeted, including $81.1 million more in health care spending. The spending figures reflect some recent spending announcements, but not the $100 million over three years the province plans to spend to build hundreds of new social housing units. Further spending increases will weigh on the projected surplus. Liberal opposition finance critic René Legacy would not say how much of the surplus he would spend if he had the power to do so.
Liberals question the government’s slow pace
But he said the Higgs government was not adjusting quickly enough on the spending side to rapid population growth and the resulting health, education and housing needs. “He doesn’t really have the ability and he doesn’t have the imagination to manage growth. We’re still seeing a government that’s dealing like it’s 2012, trying to manage deficits, shrink government, control programs, and it’s a little tone-deaf. to the realities of what we need.” He also said recent income tax cuts aimed at high earners represent poor fiscal planning. “If our economy shrinks in the next couple of years, they’re not going to bring this tax back. That’s lost revenue.” Green MLA Kevin Arseneau said he would use the entire surplus on areas such as housing, health, education and climate change. “There are so many places we could put it,” he said.
