04/24/2012 04:00 EDT | Updated 06/23/2012 05:12 EDT

Newfoundland Budget 2012: Deficit As Offshore Oil Production Drops

ST. JOHN'S, N.L. - Newfoundland and Labrador will release a provincial budget today that's expected to project a deficit after years of surpluses.

Finance Minister Tom Marshall has forecast deficits of about $400 million for this fiscal year and $211 million the following year.

Marshall has stressed that the province has to adjust its spending accordingly so it's sustainable for the long-term.

Much of the financial shortfall is due to a drop in oil production and the end of Atlantic Accord payments.

Cash from Ottawa under the joint offshore management program put about $536 million in provincial coffers last year.

The province relies on offshore oil cash for about one-third of its revenues.

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