Source: The Canadian Press

Nova Scotia’s projected $223 million deficit in the 2010-11 budget has turned into a $97.2 million surplus, but the finance minister warns against reading too much into the turnaround.

“Although we are making progress, Nova Scotia has not yet turned the corner when it comes to the underlying structural deficit,” Graham Steele said Wednesday of balancing growing demands for public services with shrinking government revenues.

“The immense fiscal challenges that faced this government when we came into power still exist and will exist when we bring forward a new budget in the spring.”

Steele attributed the surplus for the current fiscal year to higher personal income tax revenue, new pension valuations, lower interest payments and lower departmental spending.

Most of the improvements, he said, are due to one-time factors that will not carry over to 2011-12, adding that challenges remain as the deficit for next year is forecast in “the range” of $370 million. The anticipated shortfall for the next fiscal year is largely driven by the way government funds higher education as it provides prepayments to universities that will not be reflected in the books until next year.

Premier Darrell Dexter conceded his government still has a lot of work to do to meet its four-year plan to balance the budget by 2014.

“If there was any good news in this whole thing it was that every department was either on target or below budget,” he said in an interview.

The only department over budget was Transportation and Infrastructure, which had to find additional cash to pay for this fall’s storm damage in Cape Breton and along the south shore.

The premier said the government won’t allow departments to spend for the sake of using up their budgets as the fiscal year comes to an end.

“The days of fiscal March Madness are over,” said Dexter. “We’re not going to stand for it. If the budgets don’t need to be spent at the end of the year, then they’re not going to be spent.”

The opposition parties attribute the turnaround to continued hits on taxpayers rather than sound fiscal management.

Conservative Leader Jamie Baillie said an increase in the harmonized sales tax and higher personal income tax are behind the surplus and he questioned the government’s claims of spending control.

“We’re actually $1.7 billion more in debt than we were last year. That’s the single greatest argument for balancing the budget now.”

Liberal finance critic Leo Glavine said Nova Scotians welcome any “black ink” but warns that the province is far from solving its fiscal problems.

“The surplus is more about good luck than good management,” he said. “Unemployment in the province is running at about 10% so that kind of trend really offsets the momentary good news.”

IE