B.C. budget surplus erodes further as exports drop, retail sales slow
Province's books are still in the black but surplus shrinks another $31M while ICBC remains big financial risk
B.C.'s books remain in the black but the government's surplus continues to shrink for the second straight quarter.
The latest fiscal update reveals the province's projected surplus has narrowed to $148 million, down from $179 million in the first quarter, and $274 million at the start of the fiscal year.
"We're not looking for huge surpluses," said Finance Minister Carole James. "We're looking at investments that are going to help us both provide the services and supports people need, but also make sure we're growing the economy."
James presented the second-quarter report at the legislature Tuesday, outlining a number of factors taking a toll on the budget — none more so than ICBC, which is forecast to lose $91 million this year.
"I am frustrated with ICBC all the way around," James said. "We're still dealing with past claims [from old rules] that are still coming in ... We're starting to see some positive signs from some of the changes that have been made but there's a long way to go."
There was a glaring omission from her most recent figures: a whopping $400 million that was pegged on one of the NDP's major ICBC reforms that was shot down in court.
The province had brought in new court rules last spring, capping the number of expert reports in ICBC cases; that was challenged successfully by trial lawyers, and last week, the government announced it would not appeal the decision.
Instead, it will implement the measure through legislation by way of amendments to the Evidence Act in the spring.
However, the $400 million that change was expected to save was baked into the last budget, yet the court's reversal is not reflected in the current numbers.
James said it's because the province is still looking at other ways to make up those savings elsewhere and the final tally should be expected in February's budget, which she expects will be balanced.
$100M added to contingencies
The government has added some wiggle room in the form of an extra $100 million in contingency funds that will help shield the budget, along with ministry-wide cuts to discretionary spending.
So far this year, total revenue for the province is down $30 million, largely stemming from the hurting forestry sector, which is seeing revenue take a $110 million dive.
"Certainly for B.C. as a resource-based economy with key corridors to the south and west, we're not immune to global challenges," James told reporters.
We're not immune to global challenges.- B.C. Finance Minister Carole James
Exports have declined 5.7 per cent. Retail sales have slowed to 0.6 per cent growth, thanks to fewer big-ticket purchases like new appliances and vehicles.
Projected revenue from cannabis sales is $18 million lower than expected a year into the recreational roll-out, blamed partly on the illicit market — and also the timing of B.C.'s civic elections.
"As legalization was late, the municipal elections then took place so there weren't municipalities to be able to look at approving licences," said James.
The Official Opposition is blaming the latest numbers on poor economic management by the NDP, and claims the government will likely have to go into deficit or raise taxes in order to keep its committments.
"John Horgan's government has no more money to pay for the billions of dollars of promises they made like $10-a-day childcare, the $400 renter's rebate, and the elimination of school portables," said BC Liberal MLA Shirley Bond.
There are some positives to B.C.'s bottom line: a slower than expected wildfire season meant less money spent on emergencies, and housing activity is on the upswing, which could mean more revenue from the property transfer tax.
- An earlier version of this story contained an incorrect dollar figure for ICBC's projected losses for 2019. The correct amount is $91 million.Nov 26, 2019 9:17 PM PT