Updated B.C. budget calls for $130M in spending cuts
Slower that expected economic growth blamed for drop in government revenue
B.C. Finance Minster Mike de Jong tabled a budget update today calling for $130 million in cuts to provincial spending over the next three years, in part to make up for lower than expected economic growth.
Ministries are being asked to find $30 million in savings this year, and a core review of all government spending is aiming to find an additional $50 million in spending reductions and efficiencies in each of the next two years.
"We are putting ministries on notice that across government we are looking for $30 million in savings this fiscal year," said de Jong.
"In order to achieve the objective of balancing the budget it is going to require discipline and vigilance from everyone," he said. "The next 12 to 18 months are going to be tough, they’re going to be tough, but the long term prospects are good."
De Jong says the savings will come from a freeze on hiring along with cuts in travel and supplies like office furniture.
But the NDP's finance critic Mike Farnworth says it all adds up to an unbalanced budget and a dishonest government.
"They are going to say whatever they are going to say to convince people that the budget is balanced. But it is ordinary British Columbians who are going to pay the price," he said.
Farnworth says the opposition plans to point out where British Columbians will be hurt, as it debates the budget line by line over the next month.
Economic growth lower than expected
The figures tabled by de Jong on Thursday in the legislature show the province’s already tight fiscal situation has gotten even tighter because lower than expected economic growth.
Between the original February budget and now, the projected budget surplus has been reduced from $197 million this year to $153 million.
Despite the cuts, over the full three-year plan the full provincial debt is forecast to increase by $14 billion — $631 million more than predicted in February, despite the fact the Liberals campaigned on a promise of a "debt free B.C." during the spring election.
"I don’t think it’s premature to be setting a target for what we’re hoping to achieve," said de Jong in response to questions about the apparent contradiction.
Jobs, retail, and housing below expectations
De Jong said the drop in government revenue is based on lower economic growth projections for the year.
The government is now banking on the B.C. economy growing by just 1.4 per cent this year versus the original prediction of 1.6 per cent. That translates into approximately $500 million in lost GDP.
Further fuelling the lower numbers are drops in retails sales, job growth and housing starts.
- The employment growth rate was predicted to be 1.1 per cent but is now at 0.7 per cent, a difference of 9,000 fewer jobs than forecast.
- Retail sales growth was predicted to be 3.5 per cent, but is now at 1.8 per cent.
- Housing starts were predicted to be 24,679, but are now at 23,800.
- However, there is a small increase being forecast in resource revenues, particularly from natural gas.
The government also confirmed that asset sales announced in the spring are proceeding and is banking on $475 million in such sales this year.
Currently they have achieved 38 per cent of that goal with $181 million in sales either completed or with a firm sales contract in place. There are an additional $58 million in properties on the market or with sales being negotiated.
There were no new tax or program announcements in the update.
The Liberal budget introduced earlier this year wasn’t passed before the legislature was dissolved for the provincial election, so the province was required by law to update the fiscal projections and re-table the document.
- More about the province's balanced budget promise
- Read more about the budget tabled earlier this year
Finance Minster Mike de Jong says rest of the month-long summer sitting will be devoted to debating and passing the budget.