Nova Scotia budget has $1.2-billion deficit, cuts to public service

CITYnews halifax / By Lyndsay Armstrong, The Canadian Press

HALIFAX — Nova Scotia’s budget is $1.2 billion in deficit, with cuts to the public service and community groups, as the province struggles with slowing population growth and a stagnating economy.

Finance Minister John Lohr projects that the deficit for the 2026-27 fiscal year will be slightly smaller than the $1.25-billion deficit the province will end the current fiscal year with.

The minister told reporters Monday the $18.9-billion budget is focused on building the economy, while “protecting the core services Nova Scotians rely on.”

The province’s population growth is expected to slow considerably over the next two years, according to the budget documents, and the government projects that its economic growth will be 1.5 per cent in 2026, down from 1.8 per cent in 2025.

Lohr’s budget makes five per cent cuts to the civil service every year for four years, which he said will save $95 million by the fourth year. It also includes three per cent cuts over the same period for the broader public service, which includes those in the health-care and education sectors and Crown corporation staff.

“We’ve had to make some tough decisions. We started by looking inward,” Lohr told reporters before tabling the budget.

Lohr’s budget cuts discretionary grants by $130.4 million, and the minister said the affected groups will be informed in the coming days. “We understand that this will mean significant change for some organizations and that can be very difficult,” he said in his budget address.

“When deciding which grants would continue, we focused on the grants that meet the strategic priorities of the province.”

Lohr says the cuts to grants and government jobs, along with cuts to operational expenses in the civil service, will save the province roughly $304.9 million in the 2026-27 fiscal year. However, the provincial government’s total expenses will rise by roughly 7.8 per cent.

“In fact, we’re spending more in this budget than ever before. We’re continuing to invest in Nova Scotians,” Lohr said.

Spending increases are being driven by the government’s $3.5-billion capital plan, which the Finance Department says is the largest in Nova Scotia’s history. Of that, $1.2 billion is earmarked for hospital expansion projects in Halifax and Cape Breton and $873.8 million will go toward building long-term care homes.

Lohr said continued spending is needed to address “many years” of deferred maintenance by past governments in health-care infrastructure and schools.

“Since coming into government, we have invested, invested, invested in Nova Scotians and the things that Nova Scotians need in health care, in education, in the school lunch program, and we’ll make no apologies for that,” he said.

Nova Scotia’s net debt is forecast to be $27.9 billion at the end of the 2026-27 fiscal year, and the province’s net debt-to-GDP ratio is expected to be 39.4 per cent.

The finance minister said he’s confident the province’s spending choices are sustainable.

“I believe that there’s just tremendous upside in our economy. We have all the things the world wants in terms of energy potential …. There’s many different things that give me confidence in our province,” he said.

Claudia Chender, the leader of the Opposition NDP, slammed the budget Monday, calling it “completely unacceptable.”

“I am deeply concerned and frustrated on behalf of Nova Scotians to see the budget that was tabled today … Nova Scotians do not deserve to pay for the mistakes that this government has made,” Chender said.

The NDP leader said the province’s poor financial situation is a result of government’s spending choices, which includes $1.38 billion in over-budget spending in the 2025-26 fiscal year. This is spending that is not debated or voted on in the legislature.

“We know this government is allergic to transparency and procurement. So while we know that a lot of money has gone out the door, we have no assurance that Nova Scotians have gotten value for that money,” Chender said.

Interim Liberal leader Iain Rankin echoed Chender’s comments, saying the government’s spending patterns are unsustainable.

“They need to start managing the departments, holding them to their budget, and not letting over a billion dollars every year be spent without approval,” Rankin said, adding that such spending appears to have now resulted in cuts to jobs and community programs.

Premier Tim Houston said Monday the cuts presented in the new budget have nothing to do with his government’s spending choices over the past five years. He said the effects of the “trade war that (U.S. President) Donald Trump has initiated” are felt “everywhere.”

“Every time we have had an opportunity to invest in Nova Scotians, we’ve invested in Nova Scotians. Every time. And there was a lot of investing that was needed to be done,” he said, adding that recent natural disasters including wildfires, floods and hurricanes have required additional government spending.

The premier said determining where $130.4 million in grants would be cut was a “painful” and thoughtful process.

This report by The Canadian Press was first published Feb. 23, 2026.

Lyndsay Armstrong, The Canadian Press