B.C.'s deficits to total $5.4 billion
Finance Minister Colin Hansen announces deficit and other budget measures at a lockup in Victoria Tuesday.
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Updated: September 02, 2009 4:54 PM
VICTORIA – The B.C. government expects a deficit of $2.8 billion this year, with the red ink dropping below $2 billion next year and below $1 billion the year after.
The deficit for the current fiscal year is about five times the size promised by Premier Gordon Campbell and Finance Minister Colin Hansen before the May election, due mainly to a sharp drop-off in natural resource at income tax revenues. It would have been even higher, except for a cheque from Ottawa to ease the transition to a harmonized sales tax.
B.C. is taking $750 million of the $1.6 billion federal cash this year, with the rest easing deficits projected to continue at least until 2012.
To help keep up with soaring health care costs, Medical Services Plan premiums are to increase six per cent in each of the next three years. The first increase will take effect on New Year's Day, costing up to $3 a month for a single person and $6 for a family.
The 18 per cent hike in premiums matches the projected increase in spending on health care, but finance ministry documents say the annual MSP increase will match the growth of health spending, so it could be more than six per cent in future years.
Hansen softened the blow of the harmonized sales tax with a personal income tax cut and a full rebate of HST costs on residential heating.
Homeowners will not pay the provincial portion of the 12 per cent HST on natural gas, heating oil, electricity or other energy costs for heating, extending the current exemption under the seven per cent provincial sales tax. The federal GST of five per cent will continue to be charged on home heating energy, as well as vehicle fuels, which are also subject to B.C.'s rising carbon tax.
Effective Jan. 1, 2010, the basic personal credit for provincial income tax rises to $11,000, up 17 per cent. Combining the measures in Tuesday's update, Hansen says B.C. residents earning up to $118,000 will have the lowest personal income tax in Canada.
Despite the red ink, the government is following through on its promise to increase kindergarten from half days to full days, starting next fall. The budget promises space for up to half of kindergarten-aged children in September 2010, and expanding to accommodate all children whose parents want them enrolled.
Spending cuts in the budget update were mostly disclosed before Tuesday. Many arts groups around B.C. got letters last week advising them they won't be getting their share of lottery funds this year. Tourism Minister Kevin Krueger said the money has been diverted to higher priorities such as school lunch programs, community daycare.
The budget update confirms that the forests ministry will take a 12 per cent cut. Hansen said with logging down significantly, government monitoring is reduced proportionately.
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