New Brunswick unveiled on Tuesday its 2024-25 budget, the last in the Higgs government’s term prior to a fall election. While pre-election budgets can often feature ambitious plans, the Higgs government largely stayed the course with a plan that includes a balanced budget—but no tax relief.

Key highlights of the budget include a projected $41 million surplus, the province’s eighth consecutive balanced budget, a relatively small increase to provincial debt, and an increase in provincial spending.

With this budget, the Higgs government maintains its position as one of the more fiscally responsible governments in Canada. Of the six provinces that have tabled budgets for 2024/25 so far, only New Brunswick and Alberta project surpluses. New Brunswick is also likely to be one of only two or three provinces this year that will see debt decline slightly (relative to the size of the economy) from 26.8 per cent last year to a projected 26.7 per cent this year (the debt-to-GDP ratio). Since the Higgs government’s first budget in 2019/20, the province’s debt-to-GDP ratio has declined by 9.9 percentage points, the largest reduction among all provinces by a substantial margin.

That said, there’s some cause for concern. While the Higgs government has a well-earned reputation for fiscal prudence because of its balanced-budget track record, this budget continues a trend of spending increases. Program spending (total spending less debt interest costs) this year will increase by 6.2 per cent, a rate faster than population growth plus inflation. Spending also grew faster than population growth plus inflation in two of the three previous budgets. This is not sustainable over the long term, and is a departure from Higgs’ first two budgets, which held spending effectively flat, which helped generate large surpluses in recent years.

And again, the budget includes no tax cuts. In the pre-budget period, we argued that now is the time for New Brunswick to introduce a meaningful tax cut, which would help make the province more competitive, attract talent and help with the cost of living. In a pre-budget interview, the province’s finance minister said that tax cuts “would certainly be in our future” although likely not in the budget. It appears the government is deferring the announcement of any potential tax cuts for the election period, so this amounts to an opportunity delayed as much as an opportunity denied. But crucially, this budget’s projected spending increases will make it more difficult to introduce tax relief on a meaningful scale without adding to the province’s debt.

Looking closer at the debt situation, New Brunswick’s net debt will rise this year by a projected $315 million, the first debt increase since 2018/19. While the declining debt-to-GDP ratio is positive news, the $315 million increase in net debt, driven both by the province’s operating spending increase and projected capital spending, will result in debt interest costs rising from $542.4 million last year to $608.0 million this year.

At $41 million, the province’s projected surplus is relatively small compared to previous years, but this is less of a concern given that the government has a track record of dramatically outperforming its own initial cautious estimates.

Overall, budget 2024/25 contained few surprises and largely stayed the course. The New Brunswick government maintained its balanced budget and increased both spending and debt, yet didn’t propose any ambitious changes, particularly when it comes to taxation. Staying the course maintains the province’s relatively strong fiscal position, but New Brunswickers who were hoping for tax relief will have to wait, at least for now.