B.C. budget projects billion dollar deficits in each of the next 3 years as part of COVID-19 recovery plan
Total debt to rise from $87 billion to $127 billion in the next 3 years
The B.C. government is projecting a $9.7 billion deficit in this year's $69 billion budget — and additional deficits in the next two years — as the province recovers from the effects of the COVID-19 pandemic.
"The pandemic will end, but our work to provide a better future will not," said Finance Minister Selina Robinson, who said the investments were necessary to ensure British Columbians had the supports and services they needed in an uncertain time.
"Budget 2021 gives us the tools we need to build a bridge to the better days ahead, and I look forward to crossing it together."
The budget provided no new major spending announcements, as the government had made most of its commitments through the 2020 economic recovery plan, the provincial election, and the first few weeks of this year's legislative session.
Those commitments include:
- Free transit for children under the age of 12.
- A permanent $175/month increase to income and disability assistance (though down from $300/month increase during the first two waves of the pandemic), and a $50/month increase to the seniors' supplement.
- $2 billion in a low-interest loan program for builders of affordable housing.
In addition, the province has added $60 million more in annual base funding for the Ministry of Indigenous Relations and Reconciliation, $800 million in ongoing business supports and $120 million to support tourism recovery, from "major anchor attractions" to community destination development grants.
There is also $3.25 billion allocated for "pandemic and recovery contingencies," to give the province flexibility for programs necessary through the rest of the pandemic as the need arises.
"The same principles that led our response to COVID-19 will guide our recovery," said Robinson.
"First, that healthy people, healthy communities, and a strong economy are one and the same. Second, that B.C.'s recovery must include everyone. And third, it's more important than ever before to maintain the services people count on."
Total debt to rise nearly 50%
The budget contains a $40 billion increase to the province's total debt in the next three years — from $87 billion in the 2020/2021 fiscal year to $127 billion in 2023/24.
Around half that increase comes from operating deficits, while half comes from projecting capital spending, including the cost of the Site C hydroelectric dam increasing to $16 billion.
It means the taxpayer supported debt-to-GDP ratio is expected to climb from 15 per cent before the pandemic to 27 per cent by 2023/24.
"We are in a pandemic, and there's been extraordinary spending as a result of the pandemic," said Robinson, who promised that in the next year B.C. would provide a detailed timeline and approach "to a return to fiscal balance."
"The spending that we have been doing is keeping people afloat, keeping businesses afloat, that's really good for recovery."
Robinson also said that B.C. was projected to have among the strongest economic recoveries in Canada, while also cautioning that "it is difficult to forecast when we can return to balance," given the uncertainties around vaccinations and the third wave.
Greater Vancouver Board of Trade president Bridgette Anderson said the budget was reasonable given the situation.
"A solid fiscal footing has allowed B.C. to take on substantial amounts of new debt while remaining "pandemic prudent," compared to other jurisdictions," she said.
"However, we are still striving for a post-pandemic vision for the economy that attracts investment, creates good jobs and promotes opportunity. It's not clear this budget puts B.C. on the fast track to thrive in an increasingly competitive world."