The province’s deficit is higher than originally forecast, as a result of lower personal income tax revenue, and a drop in offshore oil and gas royalties.
Finance Minister Tom Osborne delivered his fall fiscal update today (Tuesday), and the news wasn’t exactly rosy.
The government was able to hold the line on spending, but the treasury is taking in $150 million less than expected from income taxes, and $147 million less in offshore royalties. This was partly offset by increases in revenue in other areas.
All of this means that the deficit is now expected to be $852 million, instead of the $778 million forecast on budget day.
Provincial government bureaucrats explained that the drop in personal income taxes is based on forecasting errors coming from the federal government data.
Revenue from oil is lower than expected, because the government originally forecast $56 per barrel for oil, but now they’re expecting the average for the year will only be $53.50 per barrel.
Osborne tried to put an upbeat tone on the whole situation.
“The results of this update are encouraging, as we remain on target for expenses and are within 99 per cent of our revenue projection,” Osborne said.
In the past month, both the Auditor General Terry Paddon and Memorial University rconomics department head Wade Locke have publicly sounded the alarm that the province’s fiscal situation is unsustainable, and the Liberal government’s plan to return to surplus in 2023 is built on shaky economic assumptions.