John Lohr projects that the deficit for the 2026-27 fiscal year will be slightly smaller than the $1.25-billion deficit the province will end the current fiscal year with.

The minister told reporters Monday the $18.9-billion budget is focused on building the economy, while "protecting the core services Nova Scotians rely on."

The province's population growth is expected to slow considerably over the next two years, according to the budget documents, but the government projects that its economic growth should be relatively stable.

Real GDP growth in 2026 is projected to be 1.5 per cent, down from 1.8 per cent in 2025.

Lohr's budget makes five per cent cuts to the civil service every year for four years, which he said will save $95 million by the fourth year. It also includes three per cent cuts over the same period for the broader public service, which includes workers in the health-care and education departments and Crown corporations.

"We've had to make some tough decisions. We started by looking inward," Lohr told reporters before tabling the budget.

Lohr's budget cuts discretionary grants by $130 million, and the minister said the impacted groups will be informed in the coming days. "We understand that this will mean significant change for some organizations and that can be very difficult," he said in his budget address.

"When deciding which grants would continue, we focused on the grants that meet the strategic priorities of the province."

Lohr says the cuts to grants and government jobs, along with cuts to operational expenses in the civil service, will save the province roughly $304.9 million in the 2026-27 fiscal year. However, he said the provincial government's total expenses will rise by roughly 7.7 per cent.

Spending increases are being driven by the government's $3.5-billion capital plan, which the Finance Department says is the largest in Nova Scotia's history. Of that, $1.2 billion is earmarked for hospital expansion projects in Halifax and Cape Breton and $873.8 million will go toward building long-term care homes.

Lohr said continued spending is needed to address "many years" of deferred maintenance in health-care infrastructure and schools.

"Since coming into government, we have invested, invested, invested in Nova Scotians and the things that Nova Scotians need in health care, in education, in the school lunch program, and we'll make no apologies for that," he said.

Nova Scotia's net debt is forecast to be $27.9 billion at the end of the 2026-27 fiscal year, and the province's net debt-to-GDP ratio is expected to be 39.4 per cent.

This report by The Canadian Press was first published Feb. 23, 2026.