N.B. deficit soars to a historic $1.33 billion, more than double initial projection

After weeks of warning, the N.B. government unveiled what many had been suspecting - the province’s deficit has grown to over a billion.

After weeks of warning, the New Brunswick government unveiled what many had been suspecting - the province’s deficit has grown to over a billion, the highest in it’s history.

Finance and Treasury Board Minister René Legacy confirmed the projected deficit in the third quarter is now $1.33 billion, an increase of almost $800 million from original projections.

“Growth is slowing, costs are rising and the uncertainty with trade and tariffs is having an impact on how we must plan for the future,” he said.

He said the status quo is not sustainable and welcomed more input from New Brunswickers through the online survey the province released Feb. 2. That survey will close Friday, Feb. 20.

The net debt is now projected to be $13.9 billion. The large deficit is due in part to lower than anticipated revenues. Corporate and personal income tax and HST revenues have decreased by $372 million.

“A couple of years ago, we had 100,000 people move into this province and increase our revenue. The revenue generation came in immediately, but an extra 100,000 people in this province obviously brings its costs with it. The costs are coming in now,” he said.

Nick McCann, assistant deputy minister, said the department of health was over budget by $432.5 million. He said much of that money went to the new physician contract, higher Medicare costs and out-of-province healthcare bills.

The physician contract with the Medical Society cost $176 million alone.

Legacy said he had no regrets in signing that contract.

“We needed to get that signed to move forward with our medical professionals,” he said.

McCann said it’s difficult to budget for how many New Brunswickers need out-of-province healthcare, but more residents were seeking care in other provinces rather than within the United States.

More demand for social services saw the department of social development spend $127.1 million more than budgeted.

Natural resources was also over due to the wildfires that happened last August.

Royalties within the forestry sector were down $45 million.

Opposition calls it a ‘sad day’ for the province

Progressive conservative finance critic Don Monahan says this is going to be a ‘financial fiasco’ to clean up.

He says the Susan Holt government spent the first year ‘handing out money to everyone’ instead of understanding the books and where the province was heading.

He feels we’re now seeing the impact.

“We’re leaving the legacy of the higher debt for future generations. So it’s cause and effect where people might start saying, ‘Hmm, do I really want to live in New Brunswick, where the tax rate is so incredibly high that for every dollar earned, my disposable income is very minimal?’” he said.

Legacy said New Brunswick isn’t the only province dealing with larger than normal deficits.

He said after the second quarter fiscal results were announced, collectively, provincial deficits amounted to over $45 billion. British Columbia just announced an $11.2 billion deficit.

Nova Scotia is projecting to be in the red $1.4 billion.

“This is not a New Brunswick situation. It’s an across the country situation,” Legacy said.

To a question on if he should remain as finance minister, Legacy said that’s not in his hands. He did say he doesn’t think this deficit is the result of a single issue.

“Should we have not taken off the PST portion on electricity and saved $90 million? Maybe. I’m not sure it would have helped New Brunswickers. Should we have not signed the nursing bonuses that we said we were going to do for a one time expense? Maybe, but it did stabilize the situation with the nurses and health,” he said.

Legacy is hopeful the final deficit to round out the 2025-26 year will be lower than the $1.33 billion. But told reporters that the province is turning their attention to ‘shift that trend of expenses to flatten out the curve and get some control on it.”

The budget will be tabled one month from today.

For more New Brunswick news, visit our dedicated provincial page.