B.C. deficit to grow: finance minister
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Updated: July 10, 2009 4:14 PM
VICTORIA – B.C. Finance Minister Colin Hansen admitted Thursday that the province is headed for a deficit much larger than the $495 million promised during the spring election campaign.
Hansen insisted that he remained confident his February budget target would be met until late June, when federal tax department figures showed a steep drop in income tax revenues to B.C. Until information from actual tax returns was available, he didn't know the full extent of the recession's impact on government revenues, especially from corporate taxes, he said.
"We knew we were taking some revenue hits, but within a range that was still manageable," Hansen said.
NDP finance critic Bruce Ralston said Hansen's explanation is not credible, because by the election campaign in April and May the full impact of the global recession on B.C. was becoming clear. He said Premier Gordon Campbell had a "George Bush, read-my-lips kind of moment," declaring in mid-campaign that $495 million would be the maximum deficit for this year.
"The premier knew when he made that statement back in the election campaign that it was false," Ralston said. "And what we are now seeing is the minister of finance constructing an alibi for the premier. It's not credible to say that on June 25th I got a phone call from Ottawa and I discovered that corporate [tax] revenue was declining, in one of the most major recessions since the Great Depression."
Hansen said he won't specify how much bigger the deficit would be until the new budget is tabled Sept. 1, and he also won't speculate about possible tax rate increases. Tax and resource revenues and expenses such as rising social assistance cases remain volatile, he said.
The government continues to look at administrative savings such as cutting back travel and advertising. Hansen said he and finance staff are going through discretionary grants, and things like provincial sponsorship for international conferences in Vancouver are getting the axe.
The B.C. Government Employees' Union says its members may also be getting the axe. It said this week that government officials are preparing plans to cut more than 200 full-time jobs in the forests ministry, and another 30 to 40 jobs in the environment ministry.
Ralston said Campbell's other promise to protect health care and education funding is also being broken. Regional health authorities were told to hold back their service plans until after the election, and they are starting to cut services, he said.
Hansen's comments came in a news conference where he tabled the audited final books for 2008-09, showing that B.C. finished the year with a surplus of $78 million. The government passed legislation to spend much of last year's surplus, more than $600 million, to help stimulate the provincial economy.
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