B.C. Finance Minster Colin Hansen says the province posted a $1.8 billion deficit for the 2009-10 fiscal year, more than $800 million less than forecast in September 2009. (CBC)

B.C.'s deficit for the 2009-10 financial year was nearly $1 billion less than originally forecast, Finance Minister Colin Hansen announced on Thursday.

Hansen said the $1.8-billion deficit was less than forecast in his September budget update mainly because the government was able to cut spending by more than $800 million.

Despite the cuts, the government still managed to increase heath-care spending by $420 million and education funding by nearly $600 million, said Hansen.

"Our government committed to protect vital services while controlling discretionary spending and reducing administrative costs, such as travel, advertising and office expenses," said Hansen.

"Ministers will not be receiving their full salaries this year due to government's continued deficit position," said Hansen.

Under B.C. law, 10 per cent of all cabinet salaries are withheld in years when the government posts a deficit.

"Taxpayers deserve to have their dollars expended in a manner that is sustainable in the long term and we are firmly committed to that goal," Hansen said.

Despite the improved financial position, Hansen said the government did not expect to balance its budget until the 2013-14 fiscal year.

Overall, government revenue declined by nearly $800 million in 2009, mainly because of lower tax and natural resource revenues, while government expenses rose by just over $1 billion.

The total B.C. budget was about $39 billion for the 2009/2010 fiscal year, while the total government debt is about $41 billion.