"We have to make corrections and we have to respond to the factors that we face as a government," Paul Davis said in the legislature Tuesday.
"We are prepared as a government to make those very difficult and hard decisions that the people of Newfoundland and Labrador expect us to make on their behalf."
It's quite a change in tone for the premier and Progressive Conservative leader. Just last spring his government was forecasting a small surplus by 2015-16 in time for the election Davis must call by the end of September.
Finance Minister Ross Wiseman earlier Tuesday threw red ink across that rosy picture. He said the plunge of Brent crude values since August along with lower offshore oil production have raised the projected deficit to $916 million in 2014-15, up from $538 million forecast eight months ago.
The spending blue print delivered last March relied on an average oil price of US$105 a barrel.
Brent crude was trading Tuesday for just under US$60 a barrel, down from a high of US$115 in mid-June.
"The price of oil, we have very little control over that," Wiseman said.
He said the province has now changed its average oil price prediction to US$63 a barrel for the rest of the fiscal year ending March 31.
The province relies on offshore oil for one-third of its revenues. It forecasts average oil prices with help from international, independent consultants but values have fallen in recent months amid a global supply glut.
Oil royalties expected last March to reach almost $2.4 billion have now shrunk to about $1.6 billion, Wiseman said.
Both Davis and Wiseman said such a drop was beyond anything that could have been reasonably predicted.
Wiseman declined to say whether program cuts or public sector layoffs are on the table.
"But we clearly need to map out a path so that our expenditure growth is contained, the current expenditure level is reduced and we position ourselves on a path for a return to a surplus budget."
Davis already announced last month a freeze on discretionary spending and all but the most critical government hiring.
Nancy Healey, chief executive officer for the St. John's Board of Trade, said the organization has repeatedly raised concerns about the province's finances.
Auditor general Terry Paddon also raised alarms about the need to curb expenses to match revenues in a report earlier this fall, as he did last year.
This year's deficit is the third straight shortfall, he said. He also noted that government spending has swelled since the Progressive Conservatives won their first of three consecutive majority governments in 2003.
Paddon said provincial expenses are up 58 per cent over the last decade and that net debt reached $9.1 billion in 2013-14. That's down from a high of almost $12 billion in 2004 but Paddon said he's concerned it's creeping back up.
Wiseman said Tuesday that net debt is expected to reach $10.3 billion by the end of this fiscal year.
But he stressed that as expenses rose, so did revenues as offshore oil wealth drove badly needed new infrastructure and program spending along with record investment in capital projects.
Healey said she hopes the government does not resort to raising taxes as it tries to balance its books.
"Moreso than ever we need to keep our private economy strong."
Follow @suebailey on Twitter.Suggest a correction