CurrentThe Province of Nova Scotia has tabled seven consecutive balanced budgets and produced surpluses at the end of each of the last six years. However, the 2009-2010 budget will require some very difficult decisions.
Costs continue to rise while revenues remain flat. The province must plan carefully to address budget pressures and needs, while allocating funds to stimulate the economy.
Nova Scotia has balanced budget legislation and government is working toward balancing the budget. However, most jurisdictions in Canada are facing the prospect of deficits next year.
Nova Scotia has had one of the country’s most stringent debt reduction policies, which has helped the province contain and then reduce the debt over time. However, this places severe limitations on the province’s capacity to fund infrastructure.
The federal budget has created some added pressures for Nova Scotia’s budget. Federal funds earmarked for infrastructure projects must be cost-shared and some federal tax measures will have the effect of reducing provincial revenues.
The current economic climate presents fiscal challenges for the province: how best to stimulate the economy while maintaining fiscal prudence?
It is important not to harm the economy or negate stimulus efforts. Reductions in government spending for operations or programs can have the effect of countering stimulus spending on capital projects.
However, government must also adjust spending levels to meet longer term projections for the revenue base, while protecting core programs for citizens.
Government is now considering where, when and how to focus its efforts to achieve the best economic supports to stimulate the economy. These may reside in capital spending, program spending, or tax measures.
All of these measures are likely to have an impact on the province’s surplus or debt.
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