B.C. forecasts larger-than-expected budget surplus
Revenues are forecast to increase by $372 million in 2016-17
B.C. is forecasting a larger-than-expected budget surplus on strong growth in revenues.
When it was tabled in February, Budget 2016 originally called for a surplus of $264 million, but stronger than expected revenues has pushed that number to $2.24 billion, according to the province.
"The bottom line on the bottom line is that we continue to see the benefits of Canada's strongest and fastest growing economy," said B.C. Finance Minister Mike de Jong on Tuesday.
Foreign home purchases up
The biggest revenue increase was from personal income tax which brought in $232 million more this quarter than expected.
Property Transfer Tax revenue forecasts are down this quarter by $204 million based on a slight cooling of Metro Vancouver's housing market.
The province also released updated foreign housing data on Tuesday. In October, foreign purchases were involved in three per cent of Metro Vancouver's residential real estate transactions, up from 1.8 per cent in September.
Transactions involving foreign nationals in the rest of the province totaled $129 million.
Since the 15 per cent foreign homebuyers tax came into effect on August 2, B.C. has collected $36 million in revenues.
In the Capital Regional District, where the additional property transfer tax does not apply, 10.3 per cent of the value of all transactions were from foreign buyers.
The province says it is keeping a close eye on the situation.
"The trend line in Victoria seems to be upward, not dramatically yet, but we are watching it very closely. You will recall that we structured the tax in a way that would allow, if we make the decision, for a geographic area to be captured by the 15 per cent tax and that could be done by regulation," said de Jong.
Teachers' court decision will affect bottom line
The province's bottom line could also be impacted by the recent Supreme Court of Canada decision on class size and composition in B.C. schools. The B.C. Teacher's Federation has estimated that restoring classrooms to 2002 levels would cost the province between $250 and $300 million a year.
"I expect there is going to be an infusion of additional dollars," said de Jong. "What I am not going to do is to unilaterally and presumptively declare how much we think that is going to be."
De Jong is also raising concerns about the future of federal health care funding. B.C. is expected to receive an estimated $142 million less from the federal government in health care transfers in 2017/18.
The provincial premiers are scheduled to meet with Prime Minister Justin Trudeau in December to discuss changes to the health care transfer. B.C. will raise its concerns about the reduction in funding at the meeting.