Minister John Lohr is pictured on Sept. 22, 2025. (Province of Nova Scotia)
Nova Scotia is now forecasting a deficit of $1.29 billion for the 2025-26 fiscal year, according to the province’s second budget update released Thursday.
That’s up $64.6 million from September’s forecast and nearly $592 million higher than the original budget.
Finance and Treasury Board Minister John Lohr said the shortfall reflects deliberate choices to invest in healthcare and affordability measures while cutting taxes. “Our deficit comes from investing in healthcare and cutting taxes to make life more affordable,” Lohr told reporters.
While revenues are slightly ahead of expectations—up $144.3 million, largely due to higher corporate income tax and HST—expenses have climbed by $721 million over budget.
More than half of that increase is tied to health and wellness, with additional costs for wildfire response, home care and nursing, refundable tax credits, and corporate restructuring.
Lohr pointed to progress on key priorities, including reducing the family practice waitlist from 110,000 people in January to 68,490 today, expanding healthcare training programs, and accelerating housing development. “We’ve created affordable places for healthcare workers to live with projects underway across the province,” he said.
The government also cut the HST by one per cent and reduced income and small business taxes, a $500 million package expected to save the average family over $1,000 annually.
Asked whether the deficit is here to stay, Lohr said the government will work to slow spending growth and let revenues catch up. “We need to spend smart,” he said. “We’ll continue to invest in the things Nova Scotians need, but we need to just reduce the pace of growth in spending.”
Departments have been asked to review grants and programs and model what a 10 per cent reduction would look like, though Lohr stressed cuts will be selective. “We haven’t said that we’re going to accept all those 10 per cent cuts,” he said. “We’re going to look at that, but there will be some cuts.”
Lohr ruled out tax increases for now. “We’re very aware of affordability,” he said. “The tax cuts that we did in the past year have resulted in slightly more than a thousand dollars per family, and we’re committed to that.”
The minister offered no timeline for returning to balance, saying details will come with the 2026-27 budget. For now, he said, the focus is on managing costs while continuing to grow the economy. “Every province is in deficit,” Lohr said. “There may be rough seas ahead, but we’re Nova Scotians. We’ll continue to do everything we need to do to support our people, grow our economy and make smart decisions along the way.”
