MacDonald Tories stake future on budget that delivers thin surplus

HALIFAX, N.S. - Nova Scotia's minority Conservative government staked its future Monday on a budget that forecasts a razor thin $4 million surplus in 2009-10, while also promising spending to help create jobs.

HALIFAX, N.S. - Nova Scotia's minority Conservative government staked its future Monday on a budget that forecasts a razor thin $4 million surplus in 2009-10, while also promising spending to help create jobs.

Facing defeat in the legislature over its handling of the recession and the province's finances, the Tories tabled an $8.6 billion budget that includes $3.4 billion for health care and $1.4 billion on education.

The government says along with the federal government, it will spend $1.9 billion over the next three years on infrastructure projects.

It says that money will keep 20,000 people in work and includes $354 million to be spent on roads.

There are also several tax measures, including an increase in the basic personal exemption and cuts to large corporate and small business tax rates.

An increase of about $10 in tax on a carton of cigarettes - effective at midnight Monday - was also announced.

If the government survives, the balanced budget would mark the eight consecutive year that the province has remained in the black.

The opposition parties have already said they do not support a change to the Provincial Finance Act that would allow the government to skip a debt payment and report a surplus for the 2008-09 fiscal year.

The budget introduced Monday does not include $260 million in debt payments that, under the existing law, the government is required to make over two years.

"While debt repayment remains a priority for us, we believe that suspending our repayment plan is the most prudent approach," Finance Minister Jamie Muir said in his budget statement. "The only alternative ... would be to significantly raise taxes or cut programs. We will not."

The finance act must be changed before the budget can be dealt with by the legislature.

The government has long maintained that it intended to present a balanced budget, but Muir conceded that without changes to the finance act, the province would already be in a deficit.

"Until that act is changed ... yes, the budget would be in deficit," Muir told reporters.

He said revenues are down dramatically from corporate and personal taxes, as well as plunging prices for commodities, such as gas and oil, which will affect offshore gas royalties.

The government's revenue from corporate and personal income taxes is forecast to decline by $318 million in 2009-10.

Offshore royalty revenues have dropped from a forecasted $458 million in 2008-09 to an estimated $196 million in the next fiscal year.

Taxpayers would get a break in the budget presented by Muir, with the basic personal exemption on income tax rising this year to $7,981 from $7,731. On Jan. 1, 2010, the government says it will increase the exemption to $8,231.

The government says the move would put about $22 more in the pockets of each taxpayer.

As well, the Tories are looking at reducing the tax rate for large corporations, which they say will save business $9.1 million this year. The are promising to completely remove the tax by 2012.

Nova Scotia's 12,000 small businesses are also in line for tax relief, with the government promising to lower their tax rate over three years, beginning in 2011, from five to 2.5 per cent.

The provincial debt will rise from its current level of $12.3 billion to $13.4 billion over the next three years.

Prior to the budget's release, Muir had already released some measures, announcing last month that school boards would get an extra $45 million and that district health authorities would get an additional $37.6 million.

Nova Scotia is the last province to table a budget for 2009-10.

Government house leader Cecil Clarke has indicated the government's plan is to return to the finance bill - which the Tories consider a confidence matter - once the budget is tabled.

 
 
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