B.C.’s promised surplus now dwindling
Liberals claim it’s still ‘achievable,’ but not a lot of wiggle room
christy Clark hasn’t stopped beaming since last month’s unexpected election victory, when the only downside was the loss of her own seat in the legislative assembly. British Columbians bought into her core message, that a B.C. Liberal government would return surplus budgets to the province, ending years of deficit spending. Starting immediately.
New fiscal numbers were revealed Thursday; they suggest that her election-winning promise is already in jeopardy, thanks to what the government gingerly describes as “a slight deterioration in the fiscal plan since the February 2013 budget.”
B.C. finance minister Michael de Jong tabled the province’s revised budget Thursday with an update for the fiscal year’s first quarter. While not disastrous, the figures are problematic.
A pre-election budget surplus that was forecast to land at $197-million for fiscal 2013-14 is now expected to be a paltry $153-million.
Tax revenues that the province anticipated in its ballyhooed pre-election budget in February are trending downward, and are expected to be $220-million lower this fiscal year than first projected, Mr. de Jong revealed, and half a billion dollars lower over the next two years combined.
He pointed to a weaker than anticipated economic performance province-wide, and to health and social transfers that are not meeting expectations, thanks to lower-than-projected migration to the province.
The declines are relatively minor, considering that B.C. intends to spend $44-billion this year. But there’s little room left for more downward revisions.
Mr. de Jong conceded the point to reporters on Thursday. He’s not exactly bragging about the revised numbers. A surplus at the end of the year remains “achievable,” he says, but the newest figure of $153-million “is not as large as I’d like it to be.... Am I absolutely satisfied or confident? No.”
As one reporter put it to him, all it would take to upset his revised fiscal plan is a summer of big forest fires, or major flooding, or a sudden hit to the revenue side. Predicting events and guessing on numbers is “fraught with risk,” Mr. de Jong agreed. everyone in B.C. was made well aware of the fact on May 14, he noted, when his party defied all prognostications and won the provincial election, defeating the B.C. NdP.
Mr. de Jong said he’d rather the province was on track for a $200-million surplus, minimum. “The numbers are what they are,” he shrugged.
The numbers are what they are. But just for the moment. The numbers will change; one can count on that, if nothing else.
B.C.’s latest anticipated surplus would be even smaller — $103-million — had the government not decided this quarter to draw down $50million from its forecast allowance adjustment, now set at $150-million for the rest of this fiscal year. It was “lowered slightly to reflect a reduced risk of not achieving fiscal plan targets,” reads the June budget update, tabled Thursday.
That’s a bold comment. Hitting fiscal targets is a risky business; that’s why budget forecasts in this province are so tenuous, and why they always end up being reconfigured.
To balance its books this year and next, the province is still committed to unloading $625-million worth of Crown properties it deems surplus. So far this year, 14 properties have been sold or have “negotiated contracts in place,” netting the province $58-million. The asset dump includes five former public schools, surplus school lands, a former health-care facility in Vancouver and even a laundry.
Another nine properties are on
Guessing numbers fraught with risk
the block and are expected to fetch $86-million this year. More properties are to be disposed of next year.
Other revenue-boosting measures introduced in the original budget plan tabled in February remain in place: a 1% hike in the province’s corporate tax rate; a “temporary” income tax increase for people making $150,000 and more per year; more tobacco taxes.
The best news for British Columbians? Ms. Clark’s government thinks it can hold the line on expenditures, with just small program and capital-spending increases planned in a number of departments. Spending reductions are trending higher than originally forecast. Mr. de Jong says additional cuts of around $30-million may be coming, and more savings should be identified in a planned “core review” of government programs.
That leaves the bottom line: the province’s total debt. It continues to grow, alas, and at a faster clip than forecast in February. B.C.’s debt will increase by 12.1% this fiscal year, according to Thursday’s budget update, to $62.6-billion. Annual debt servicing costs are pegged at nearly $2.4-billion.
The debt is now expected to reach $69.8-billion by fiscal 2015-16. And that’s the best-case scenario. To get there, Ms. Clark and her government will have to hit all of their latest targets. And that’s the easy part. delivering on their most ambitious election promise — to make B.C. debt-free — demands something miraculous.