HALIFAX -- The Nova Scotia Liberals delivered a $9.9-billion budget Thursday, its first since forming government, forecasting a deficit of $279 million for 2014-15 that includes money to cap class sizes and recruit doctors.

Finance Minister Diana Whalen had warned that the budget would be in the red, and while revenues are up slightly mainly due to a bump in personal income tax, that's offset by $455 million in increased spending.

"We have undertaken a series of measures to meet our commitments and effectively respond to Nova Scotia's clearly articulated desire for a new direction," Whalen said in her budget address.

"Today's budget will elaborate on that mandate for change and prepare the foundation for the work ahead."

The government is hiking health spending by $194.1 million, with $32.6 million to support home care services and another $10.6 million for programs aimed at recruiting and hiring doctors in rural areas of the province.

In education, the government plans to spend an additional $65 million over four years. That includes $18.6 million this year, with $7.2 million toward capping class sizes from Primary to Grade 2 and another $3.5 million for early literacy initiatives including the re-introduction of a reading program that was axed in 2011.

The government has also decided to eliminate a graduate retention rebate that provided university graduates with a maximum annual tax credit of $2,500, resulting in $49.5 million in estimated savings.

It has also committed to eliminating the interest on the provincial portion of student loans for students who began repaying them on or after Nov. 1, 2007, at a cost of $1.6 million annually.

"We will focus our investments on supporting students while they are studying and to enable new graduates to gain experience, enter the workforce and build their future here in Nova Scotia," Whalen said.

There are no new tax measures in the budget and the government has decided to maintain the harmonized sales tax at 15 per cent.

The estimated net debt is expected to grow to $14.6 billion, up from $13.9 forecast in last year's budget. That amounts to about $16,000 for every man, woman and child in Nova Scotia.