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B.C. Views: Will truth die on Deficit Hill?
VICTORIA – Whatever happens in the provincial election five months from now, taxpayers should insist that it be the last spring vote.
Now I know this isn’t sexy like the horse race of popularity polls so loved by the TV news. But integrity of public financial information is the next vital step in democratic reform, even more important than scheduled election dates. And the B.C. tradition of tabling untested election budgets, shutting down the legislature and firing up the campaign buses, has to end.
The B.C. Liberals are on track to surpass the NDP on fudge-it budgets, having put millions into TV ads that insist the 2013 budget will struggle into the black. This is the hill Christy Clark has chosen to die on.
Glen Clark set the modern bar with his 1996 election budget. After a run of red ink, it conjured a tidy little surplus that helped the NDP squeak out a win over the plaid-shirted Gordon Campbell.
Campbell’s noisy exit had its roots in his 2009 fudge-it budget, which clung to an outdated $500-million deficit forecast that had already melted down along with banks, auto makers and U.S. real estate. After the election, British Columbians found out we were really $2.8 billion in the red.
Not one to waste a good crisis, Campbell ordered the harmonized sales tax.
Now Premier Clark and Finance Minister Mike de Jong are proposing to balance the budget and shut down the HST money machine.
Clark gave a speech in Coquitlam the day before last week’s budget update, warning it “won’t be pretty.” And it’s not. In September the current-year deficit forecast jumped above $1 billion, largely due to a glut of natural gas. The latest update pushed it near $1.5 billion.
Natural gas royalties are bumping along the bottom, no big change there. But now coal prices and shipments are down, and a slow real estate market has pinched the flow of cash from Bill Vander Zalm’s legacy, the property purchase tax.
I erred in a previous column, saying this year’s deficit is partly due to a staged repayment of federal HST transition money. Not so.
That entire $1.6 billion was booked in last year’s budget, pushing that deficit to a record $3 billion. This means the current $1.5 billion bleeder is based strictly on current revenues, debt servicing and spending.
So how is this sucking chest wound going to suddenly heal next spring? De Jong provided an early version of his answer in his September financial statement. Amazingly, it projects a recovery of more than $100 million in natural gas royalties next year. Hmmm. Liquefied natural gas exports to Asia are still years away, and the U.S., our only current energy export customer, is developing its own huge shale gas and shale oil reserves.
In another forecasted miracle, sales tax revenue is expected to dip by a mere $120 million as the old provincial sales tax returns next year. In 2014 it is projected to bounce right back to where it is today, around $6.1 billion.
That’s odd. When former finance minister Kevin Falcon announced the transition back to PST last May, he described annual revenue loss of about $500 million the first year, and more than $600 million the next.
Granted, business investment credits and HST rebates to the poor also end, saving the government a pile of cash as this significant tax reform dies.
But it still looks like another fudge-it budget, designed to help another premier avoid the political graveyard at the foot of Deficit Hill.
Tom Fletcher is legislative reporter and columnist for Black Press and BCLocalnews.com