Expenses outpace revenue as Nova Scotia deficit climbs to $1.29B

Nova Scotia closes 2025 with record $1.29 billion deficit.

Nova Scotia’s deficit has deepened to a record $1.29 billion as spending continues to outpace revenues amid economic uncertainty and a shaky global economy.

The province’s final fiscal update for the 2025 budget shows revenues were up $144.3 million, a 0.9 per cent increase from the forecasted $16.6 billion.

That small revenue gain was eclipsed by a 4.1 per cent increase in expenses, which are up $721.6 million to $18.3 billion.

Overall spending across all government departments is up 4.4 per cent, roughly more than $719 million more than budgeted for.

Major changes in departmental expenses include:

• Health and Wellness: $416 million for inflationary and utilization costs, meaning higher patient volume
• Restructuring: $172 million higher than anticipated corporate initiatives, but it’s not clear where this spending went. The finance department could not elaborate on what those costs were
• Wildfire and emergency management cost: included $33.6 million for the large-scale wildfire season

Overall, the provincial deficit grew by $64 million since the last budget forecast update in September to an overall record deficit of $1.29 billion.

On the trade front, the United States and China continue to be the province’s biggest export and trading partners. Exports are steady to the U.S., increasing slightly by 0.1 per cent, while exports to China were down 26.8 per cent following the retaliatory tariffs placed on Canadian seafood.

Seafood exports are down by six per cent. The province says seafood is moving into other regions like Vietnam and Hong Kong, which is measured separately from China.

Given the deficit, a fiscal pullback is likely on the horizon.

“We have to let the growth in revenue and the growth in spending kind of match, so we need to slow down the growth in spending,” said the province’s finance minister, John Lohr.

The pressures are fueling talks of cuts, although Lohr wouldn’t say how deep, except that more details would come in the 2026-27 budget, slated for release early next year.

“We have put a hiring directive in place for civil service to make sure that when we fill positions, we are strategic about it. That will result in savings over time, and we can do this without impacting frontline workers. We’re also looking at reducing grants and programs across government by 10 per cent,” said Lohr.

Asked if government has a spending problem, Lohr didn’t deny things are costing more, but got political, framing the spending as a catch up after years of underfunding.

“We had had eight years of very little investment in many of these issues, we felt the need, I know I felt that in my eight years in opposition, just start, let’s get things done,” he said.

Opposition critics argue while spending has put the province in a record deficit, it’s done little to help Nova Scotians trying to make ends meet.

“We see GDP growth slowing down and they’re ignoring that and spending more. What we need is an economy that matches government, and we continue to increase the size of government while our economy suffers,” said Iain Rankin, interim leader of Nova Scotia Liberal Party.

While there were no concrete answers on how the government plans to cut the deficit, Lohr confirmed no tax hikes are planned.

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