HALIFAX - Nova Scotia Premier Darrell Dexter has appointed an expert panel to give his fledgling NDP government advice on how to fix the province's rapidly deteriorating finances.

The premier, whose New Democrats won a majority government June 9, said the four-member panel will be given a broad mandate to recommend policies to get spending under control and spur economic growth.

"This is a serious point in time for this province," Dexter told a news conference Tuesday.

"We face great economic challenges. We face flat revenues. ... This is an opportunity, though, for us to put the province on the right footing."

The $70,000 report will be released in the fall, he said.

An independent review of the province's finances, released Monday, indicated the province could be saddled with a $1.3-billion deficit within the next three years, while its accumulated debt could jump $4 billion to a whopping $16 billion, unless big changes are made.

A political science professor said it's already clear what has to be done.

Jim Bickerton said the NDP should get used to the idea of running deficits to get the province through the global economic slump.

He said Dexter would be wise to lay the groundwork to back away from the NDP's key campaign pledge to balance the province's budget in 2010 without raising taxes or cutting spending.

"They won't be able to maintain that position," Bickerton said in an interview. "Going forward, it is not going to be possible."

The financial review concluded that under the province's existing balanced budget legislation the NDP will have to find or cut $809 million to balance its books in 2010-2011.

Bickerton, who teaches at St. Francis Xavier University in Antigonish, N.S., said Nova Scotia's finances are so tight the government will have little choice but to go into the red -- an approach most provinces have already adopted.

Drastic spending cuts and tax increases are not politically palatable options because such moves would cripple the province's social programs -- a non-starter for the NDP -- and stall any economic recovery, he said.

The professor said Dexter will likely be told he should amend the balanced budget legislation to allow for deficit financing.

"The balanced budget legislation is a straitjacket," he said. "It constrains governments from managing recessions when stimulus is needed."

On Tuesday, Dexter was repeatedly asked if he was still committed to delivering a balanced budget without cutting spending or raising taxes.

"I still believe that these things are not impossible to do," he said.

The panel members are Donald Savoie of the University of Moncton, Elizabeth Beale, president of the Atlantic Provinces Economic Council, Tim O'Neil, former vice-president of the Bank of Montreal, and economist Lars Osberg of Dalhousie University.

Liberal critic Diana Whalen said the NDP's "unrealistic" campaign commitments left the party with no room to manoeuvre.

"If you know accounting, you know there are only two ways to get more money: either raise revenue or cuts expenses," she said. "They've made promises to do neither."

Bickerton said the financial review and the government's promise to consult with Nova Scotians could mark the beginning of a bid to change the political discourse in a province where "deficit" is a dirty word.

"Nova Scotians have been told, over and over for so many years, that deficits are the worst possible thing that can happen," he said. "That's become the accepted wisdom in this province."

During the election campaign, all party leaders said they were opposed to carrying budgetary deficits.

Dexter has argued deficits are unwise because the province is already carrying too much debt. At $12 billion and rising, Nova Scotia's accumulated per capita debt is the second largest in Canada, eclipsed only by Newfoundland's burden.

During the election campaign, Halifax-based pollster Don Mills said voters rejected deficit financing as a means of stimulating the economy because of a widespread awareness of the province's huge debt.

However, attitudes in the province may have changed, said Peter Butler, a political sociologist at Dalhousie University in Halifax.

He said he conducted public opinion research earlier this year for the former Conservative government that indicated Nova Scotians were ready to embrace deficits.

"There's no question that the (Rodney) MacDonald government had been given an endorsement by the people to run a deficit," he said.

"There was nobody who we talked to in our many focus groups who was fundamentally opposed to that idea. ... Simply put, their attitudes had changed."

Butler, who used to do polling for the Conservative party, said the Nova Scotians he talked to made it clear that going into the red was understandable, given the worsening economy.

"They thought the government was being a little too ideological," he said, noting that the interviews were conducted in late 2008 and early 2009. "At the time I did the research, that was clear."

Butler said the Tories ignored his study, pressing ahead instead with a complex plan to balance the province's books by suspending payments on the debt -- a move that led to the defeat of the government in the legislature on May 4.