The $2.775 billion budget deficit stands in stark contrast to the $495 million deficit that was forecast in February of 2009.

The question to be asked is what happened?

The short answer is that government revenues seriously declined from what was forecast.

As an example, personal income tax revenue alone declined by $881 million. Combined with corporate income tax declines of $120 million that is a loss of roughly $1 billion not flowing into our provincial treasury.

Some have suggested this information should have been known back in February, however as most of you know the deadline for filling income taxes this year was not until Thursday, April 30, several months after the February budget numbers had been forecast.

Another revenue reduction occurred in the natural resource sector where natural gas royalties decreased by nearly a half billion dollars.

Other declines in mining and mineral resources revenue added further losses of $339 million.

These losses combined with the decline of the forest industry means that resource revenue suffered a loss of $1 billion in total.

Critics who have suggested that this information should have been known back in February should note just how volatile resource prices are during a worldwide recession.

As an example natural gas prices in June of last year were $9.33 a gigajoule by July of this year prices had fallen down to record lows of $2.05 a gigajoule.

The above is only a snapshot of B.C.’s finances to illustrate the extent of the sudden and significant loss of $2 billion in revenues.

At the same time as these revenue reductions, health care spending this year is increasing by close to $1 billion.

These increased health care costs combined with further increases to total education spending as well as increased funding for welfare and social development will see spending increases exceed $1 billion.

Running government is not unlike running a business or household, and in this case, with revenue losses exceeding $2 billion combined with increases in health and education spending of over $1 billion a very serious situation is created.

Please keep in mind this does not include several hundred million dollars in fighting forest fires this summer, much of that money spent right here in the Okanagan.

With revenues significantly down and spending on health and education increasing government is not able to provide all of the support that many British Columbian’s have become accustomed too.

Nary a citizen is supportive of any increases in taxation and by the same token very few are supportive of any reductions in grants or services.

This situation is not unique to British Columbia, with governments across North America currently facing similar challenges, even our neighbours in Alberta are reporting that the April forecasted deficit of $4.7 billion has now grown by an additional $2.2 billion and will approach $7 billion for this year alone.

With citizens opposing increases in taxes and any reductions in services these are certainly very challenging times for elected officials.

I do appreciate and understand there is both anger and frustration from many of you regarding the difficult decisions that have been made to date.

I can pass on that no elected official enjoys having to say no and not having the financial resources we have all enjoyed over the past years is a frustration that we all share.

While these decisions are difficult it is important that we ensure British Columbia weathers the current economic crises and emerges a better, stronger province that our children and grandchildren can depend on.