Budget 2019 won’t be so easy

The New Democrats increased provincial program spending by $3 billion over just part of the past fiscal year, and there’s still lots more to do, Finance Minister Carole James said Tuesday.

The new spending on service delivery in a range of areas represents a six per cent increase over the previous year, the largest in several years.

The previous government’s annual increase in ministries’ service delivery averaged much lower over the past several years.

Part of the NDP election campaign last year was that the B.C. Liberals were neglecting some sectors of society by short-changing an assortment of programs.

The public accounts that James released Tuesday — the full financial account of B.C.’s performance for the year ending March 31 — shows the new government made a concentrated effort to close the gaps the party highlighted during the campaign.

Health Ministry spending rose by $1.2 billion, much of it related to mentalhealth and opioid-abuse measures.

Education spending, much of it stemming from the court decision that mandated the hiring of hundreds more teachers, increased by $623 million.

There was $494 million more spent in the social-welfare sphere and $883 million more spent in the natural-resource sector, much of it on last year’s wildfires.

James oversaw the increases even while hitting most of the marks set for fiscal prudence. The year-end budget, almost three-quarters of which the NDP was responsible for, is balanced, with a $300-million surplus.

B.C.’s overall debt of $65 billion is down by $1 billion, the good credit rating is upheld and the growth forecast is holding steady.

Tuesday’s information dump was a comprehensive report card on the NDP’s fiscal management. It passed with good marks across the board. But there is a nagging impression that the first year in office was the easiest one it will have, from a fiscal point of view.

The NDP took over in the midst of an economic boom that produced a $2.7-billion surprise surplus just months before it took office.

That surplus was used to pay down debt, one of the important checkpoints to maintain the credit rating.

But one of the top NDP priorities is to moderate the real-estate market. And that superheated market, until recently, was a large part of the booming economy that was producing all the revenue bonuses that James is relying on.

Most indicators suggest that market is cooling. That’s going to reduce the revenue coming from real-estate taxes — the property transfer tax, the foreign buyers’ tax and the upcoming speculation tax.

And if it slows down the rest of the economy, everything gets a lot tougher for a government bent on doing more.

James said Tuesday the government’s focus is on moderating the housing market, and she remains concerned about an economy built on a speculative realestate market. The NDP could wind up dealing with the consequences of getting exactly what it wants.

Another set of cross-purposes is shaping up at B.C. Hydro. The NDP’s dominant theme is to make life more affordable. That means resisting tax and rate hikes when possible.

The government earmarked $950 million to reduce the billions that the utility carries in deferral accounts. And there’s a concerted campaign by auditor general Carol Bellringer, as well, to curtail that accounting practice. She’ll have more to say about that today at a news conference.

Reining in deferral accounts would reduce Hydro’s leeway to push rate hikes off into the future. The Liberals used to encourage that, by forbidding the B.C. Utilities Commission from getting involved in them. B.C. Hydro is due to submit a rate application to the commission next February.

The government is deep into a review of the utility, but is taking a hands-off policy on that process.

The commitment to affordability and the desire to do more for people might eventually crash into dwindling revenue and public agencies’ thirst for higher rates.

Les Leyne covers the B.C. Legislature for the Victoria Times Colonist.