B.C. budget calls for $2.8-million deficit
Finance Minister Colin Hansen announces deficit and other budget measures at a lockup in Victoria Tuesday.
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Updated: September 03, 2009 11:27 AM
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 and 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.
“I think first of all this is a budget that protects our vital services...The finance minister said from the very beginning that we’ll protect health care. We’re increasing the health care budget for this budget, that we would protect education. We’re increasing the education budget. And we’ll protect some of the key social programs, and we’re doing that,” Richmond Steveston MLA John Yap said Tuesday afternoon.
Yap said the current budget will position the province economically, “so when we get out of this recession, which we will...this budget positions B.C. to have very strong economic recovery and to grow and generate investment, job growth and revenue.”
Effective Jan. 1, 2010, the personal income tax exemption will rise to $11,000 for everyone, which is “very meaningful,” Yap said, meaning B.C. will have the lower personal income tax rates for people earning up to $118,000.
Difficult decisions needed to be made by politicians in light of the “most unprecedented turndown in the global economy, and B.C. is not unaffected.”
Yap said the province is fortunate that the Olympic Games is just a few months away.
“We could not ask for an economic stimulus more powerful than having the Olympic Games. Truly, we are blessed that way,” he said.
Richmond East MLA Linda Reid said B.C.’s economy shrinking by two per cent is huge.
“We are down billions of dollars in government revenue,” she said. “Have we got ourselves out of a budget deficit in the past? Yes. Can we do it again? Yes. But it’s going to take a good chunk of time.”
Reid said the health care budget will be ramped up to $15.7 billion by 2011, an 18-per-cent increase over three years.
“That’s enormous in these economic times.”
The implementation of full-day kindergarten will kick-off next year, but with the province short 1,000 kindergarten teachers, that means the program will be phased in over two years.
This budget will see no taxes paid for another 75,000 B.C. residents, she said.
Small-business tax threshold is being lifted to $500,000 before taxes are paid, she added.
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.
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 and community daycare.
Susan Lambert, president of the vice-president of the B.C. Teachers Federation, blasted the lack of school support. “We’re going to see deteriorating classroom conditions next year, higher class sizes, more students with special needs without support in the classroom. The excuse of declining enrolment is gone. We’re going to have increasing enrolment, according to government projections, next year, and there’s no planning for all-day kindergarten.”
—with files from Martin van den Hemel
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