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Debt-burdened New Brunswick faces tough budget

Riding into the premier’s office on a wave of populist anger over the proposed sale of NB Power, David Alward promised consultation and stability, a relief from the game-changing boldness attempted by the Liberals he replaced.

But Mr. Alward’s Progressive Conservative government must now find its own bold vision, tabling a first budget on Tuesday that will show how it plans to tackle the province’s crushing financial problems.

“If we don’t do something soon we will be hitting the wall,” warned Donald Savoie, professor at the Université de Moncton and one of the region’s most respected voices on public policy. “I don’t think you and I can overstate the importance of the budget. Because if there’s no clear plan to address the fiscal situation, we’re looking at some major issues down the road.”

The Globe and Mail

Finance Minister Blaine Higgs says the New Brunswick government will cut the province’s deficit down to $448.8 million this fiscal year.

Tobacco will now cost $1.31 more per pack, generating $25million in revenue. New Brunswickers will now pay 2.9 cents/litre more at the pumps, 2.3 cents more for diesel. Higgs anticipates this will bring in $44million in revenue.

Legislature approves the 2011-12 budget. Higgs rises to deliver his "new direction for New Brunswick."

No catastrophic drug program for individuals struggling to cover the costs of treatment for serious illness, but the Tories will front a program to reduce the rate of diabetes in New Brusnwick.

Last year, Dr. Ellish Cleary, the province's chief medical officer of health, released a report predicting one in 10 New Brunswickers would be living with diabetes by 2012-13.

N.B. government slashes spending but hikes gas and cigarette taxes in new budget

FREDERICTON - The New Brunswick government is slashing spending while hiking taxes on cigarettes and gas in an effort to correct the province's dire financial picture.

The $8-billion budget includes a nearly $449-million deficit, but that's less than half the $1 billion deficit that Finance Minister Blaine Higgs said was possible last November.

As of Wednesday, the tax on cigarettes goes up by $1.31 per pack, while the provincial tax on gasoline increases 2.9 cents a litre.

The net debt is projected to hit $10.2 billion by next March or about $13,545 for every man, woman and child in the province.

Income taxes will remain the same but a tax rate cut for high income earners that was promised by the previous government is cancelled.

Higgs says there will be ongoing studies of such things as highway tolls and reducing the civil service in an effort to balance the budget by 2014-15.

(The Canadian Press)

Highlights of New Brunswick's 2011-12 budget:

- A deficit of $448.8 million is projected in an $8 billion spending program.

- Net debt to reach $10.2 billion by March 2012, an increase of more than $630 million.

- Share of the debt for every man, woman and child in New Brunswick is about $13,545.

- The tobacco tax will be increased by 5.25 cents per cigarette to 17 cents per cigarette, or $1.31 per pack, effective at midnight, producing an estimated $25 million in additional revenue.

- The provincial gasoline tax will increase by 2.9 cents a litre and diesel by 2.3 cents a litre, generating an extra $44 million in revenue.

- No increase in personal income taxes but a cut in the tax rate for high income earners that was promised by the previous government is cancelled.

- The general corporate tax rate will fall to 10 per cent in July and be frozen at that level, while the small business tax will be reduced from five per cent to 4.5 per cent.

- Spending growth is cut by $220 million through initiatives in various departments and government agencies.

- More than $30 million will be spent on job creation in northern New Brunswick.

- The salaries of members of the legislature are frozen for the third consecutive year, and a hiring freeze on civil service jobs continues.

- The operating grant to public universities is increasing by two per cent, and tuition increases for colleges and universities are capped at $200 per full-time student.

- The government expects to save $1.6 million by reinstating the parental contribution for student financial assistance, which was eliminated four years ago.

Higgs: "In the simplest terms, government is spending more on public services than it can afford"

"2010-11 debt is projected to increase by $1.235billion to a higher than expected total of $9.6billion."

Managing spending growth and implementing efficiencies

The 2011-12 budget outlines a series of ways the provincial government will make strategic investments while at the same time taking new efficiency measures to rein in spending and return to balanced budgets.

Investments and initiatives include:

● establishing the $30-million Northern New Brunswick Job Creation Fund and the $7.1-million Miramichi Regional Job Creation Fund, which consists of both contributions and loans;
● initial funding for a mental health action plan to address the recommendations of the McKee Report;
● initial funding for a comprehensive diabetes strategy focusing on the prevention, detection and management of diabetes, including funding for insulin pumps and other essential supplies;
● initial funding for the establishment and administration of a patient assistance fund to provide support to persons with multiple sclerosis;
● continued implementation of the province’s poverty reduction plan;
● working with home-care agencies and special-care homes to ensure that home care workers receive an increase in their hourly wages;
● increasing the operating grant to public universities by two per cent and increasing targeted bursaries to students from lower-income families;
● making significant investments to support positive outcomes in early childhood development, student achievement and inclusion practices;
● creating a teaching supplies fund that will allow teachers to buy educational items for their classrooms; and
● increasing funding for school supplies for low-income families to $100 from $50.

Balancing fiscal needs with competitive taxation

The provincial government re-affirmed its commitment not to reduce the general corporate tax rate below 10 per cent and also kept its commitment to begin lowering the small business tax by reducing it to 4.5 per cent from five per cent.

The provincial government announced it will hold the top marginal tax rate on high income earners in the current top bracket at 2010 levels of 14.3 per cent. This measure applies to about 11,000 New Brunswickers who earn more than $120,796. The provincial government will delay additional personal income tax reductions that had been scheduled for 2012 – meaning, all tax rates for 2012 will remain at the 2011 levels.