The government of Newfoundland and Labrador owes the federal government millions of dollars. The province received more than it should have in federal HST payments, and now Ottawa wants that money back.

Each year, the federal government collects HST and other tax revenue and then disperses it to the provinces in payments based on a formula using estimates.

After a formula adjustment this year, Ottawa determined all four Atlantic provinces were overpaid. Newfoundland and Labador has received $140 million too much.

More than expected

Finance minister Cathy Bennett expected to have to repay some money this year, and budgeted $89-million for that. However she wasn't expecting the actual amount to be so high and now has to find an additional $51 million to pay back the federal treasury.

This is certainly a large amount ... at a time when the provincial treasury is under considerable stress. - Cathy Bennett

None of the $140 million total has yet been paid.

"This is certainly a large amount, and that's why we're working hard to come up with a repayment schedule that makes sense for the people in the province and for the provincial treasury at a time when the provincial treasury is under considerable stress," said Bennett.

Money is already tight for a government running a $1.58-billion deficit. (Mike Crawley)

The provincial government is running a deficit of $1.58 billion.

Last year's budget included school, medical clinic and library closures, as well as a cut in the highway snow clearing budget, in an effort to save even small amounts of money. Finding an additional $50 million will be a challenge, Bennett said.

"At this stage we're still looking at all the options we have for this year's budget," said Bennett.

"We're looking at a more efficient public service. There's a whole lot of analysis going on about how to deliver better programs. Until all of those things have clarity, at this stage, I can't tell you what the outcome will be."

Hoping for flexibility

Bennett said the Canadian Revenue Agency does offer options, including spreading the repayment period over a longer time.

"Any flexibility the federal government may be able to present in a repayment schedule that could push that out into the future would be very helpful for us right now. Those discussions are ongoing and we'll wait to see what happens," she said.

For now, though, there's not a clear idea from where that money will come.

"No. Right now there's not," Bennett said.