HALIFAX – Nova Scotia’s finance minister says spending cuts are coming next year but there won’t be any tax or fee increases as the province struggles with its worsening finances.
John Lohr says he’s asked all government departments what a 10 per cent rollback of programs and grants would look like in next year’s budget, but doesn’t plan to accept everything they recommend.
“We need to slow down the rate of spending, and let revenue catch up with expenses,” Lohr said during his December fiscal update on Thursday.
“Ultimately, I think this weighs heavy on all of us.”
The warning came as Lohr revealed the government is projecting a $1.29-billion deficit in the current fiscal year, up $64.6 million from the last update in September.
Total departmental expenses have increased by $224.6 million over the last three months to $17.2 billion. With tax credits, pension adjustments and debt servicing costs factored in, overall expenses now stand at $18.3 billion.
Revenue is up just $189.2 million to $16.6 billion.
The spending increase is mainly driven by $184.6 million in restructuring costs. Lohr declined to provide further details on money, which he said will be used for “corporate initiatives.”
There’s $30.7-million in extra costs for battling last summer’s forest fires, with about $25 million covered by the province’s $200-million contingency fund. Expenses for the seniors pharmacare program are up $23.3 million. There’s more teachers working in the province than previously expected so the cost of their pension plan contributions are up $8.3 million. There’s an extra $12.3 million for home care and $8.6 million for repairing trails and cleaning up after storms and flooding in 2023 and 2024.
The increases were partially offset by delays to several government projects, such as $28.2 million in unspent cash for new childcare spaces, a new school lunch program that came in $16.4 million under budget, and $12.8 million worth of delays on building new long-term care homes. Officials say those projects, and the cash to fund them, will move forward to future years.
On the revenue side, personal income taxes are down $39 million, offset by a $2.9-million bump in corporate income tax and an extra $64.6 million in HST thanks to a moderate increase in consumer spending.
Transfers from the federal government were up $46.3 million from September. Health-care funding from Ottawa was up $25.3 million due to the province taking a bigger share of the national population. About 2.62 per cent of Canadians now live in the province, compared to 2.58 per cent previously.
Lohr’s spring budget included a one per cent cut to the HST and the indexing of income and small business tax brackets, both of which the government says will save the average family about $1,000 per year. The minister ruled out any increases in taxes and fees in the next budget.
“I think I can say that no, we’re not considering that,” he said.
Lohr said the government is working hard to grow the economy, especially in the resource sector, and is already seeing results. As the economy grows, he said he expects to draw in more workers from the rest of Canada, helping to put the government’s finances on stable footing.
Premier Tim Houston’s Tories have never posted a balanced budget. The deficit was $584.9 million in 2022, their first full year in power. That was followed by $506.1 million in red ink in 2023, another $278.9 million in 2024 and a $467.3-million deficit in the last fiscal year.
NDP house leader Lisa Lachance said the government has been overspending every year while Nova Scotians are still struggling.
“There’s a lack of transparency. There’s a lack of accountability and we’ve seen that on an ongoing basis, and we’re very concerned on how Nova Scotians are doing,” Lachance said.
Liberal house leader Iain Rankin told reporters, “We are piling on spending that we can’t afford. What we’re seeing here is another few million (dollars) onto an already billion-dollar deficit and we desperately need an economy that matches the government’s ambitions to spend.”
This report by The Canadian Press was first published Dec. 18, 2025.
