12/20/2012 01:01 EST | Updated 02/19/2013 05:12 EST

Reduction to transfers not as bad as first thought: Nova Scotia finance minister

HALIFAX - Nova Scotia's finance minister says federal officials have assured her the province is getting more in federal transfer payments than initially expected.

Earlier this week, Maureen MacDonald said there were indications the province's transfer payments were going up, but not as much as forecast in provincial government's April budget. She said the change could hinder the province's bid to balance its books by next spring.

However, MacDonald now says the province will be getting about $15 million less than it expected, a relatively small reduction considering the province has a $9-billion budget.

Still, MacDonald says every dollar counts as the province's deficit for this fiscal year is projected to hit $277 million — a $66-million increase when compared with the budget.

"We have a very steep hill to climb," she said Thursday after a cabinet meeting.

"Revenues have softened. Nova Scotia is in the same boat as many other provinces. Misery loves company and we have lots of company."

MacDonald said there are a number of provinces struggling with growing deficits, including Alberta, New Brunswick and Newfoundland and Labrador.

"What's occurring in the economy is a softening of revenue. ... It's impacted all of us."

MacDonald said departmental spending is under control, but provincial revenue has dropped by $90 million, mainly because of a $61-million decrease in projected income tax revenue.

"The expenditure side is looking very good," she said. "Departments are coming in at or under budget and we will continue to maintain that discipline."

The minister said the process of balancing the books will be challenging.

"It's not going to be easy to get back to balance in the current climate," MacDonald said.

She declined to talk about potential budget cuts, saying she wanted to consider her options during the holiday break.

Michael MacDonald, Canadian Press

Note to readers: This is a corrected story. An earlier version incorrectly stated that transfer payments were declining. In fact, the province says they are rising less than expected.