British Columbia is forecasting a record budget deficit and a rising debt of more than $129 billion just a few weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-25 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-27, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues, and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
Earlier this month, Canfor Corp. announced it is shuttering two northern B.C. sawmills, citing a recently imposed U.S. tariff as a key factor on top of ongoing financial losses, a weak lumber market and difficulty accessing economically viable timber in the province.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as minister of finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-24 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
Businesses seek economic plan
Earlier on Tuesday, leaders from a wide array of businesses in British Columbia urged the province’s political parties to deliver a clear and actionable plan for revitalizing the economy.
Groups representing the forestry and mining industries, independent businesses and contractors say they have sent a survey of 10 questions to leaders of political parties ahead of the fall election, asking for a clear response on their economic visions for B.C. and concrete steps to get there.
Business Council of British Columbia president Laura Jones says her group is seeing more residents expressing a loss of hope in their “prospect of building a good life” in the province due to economic concerns, even if B.C. isn’t technically in a recession.
Other business leaders say they want the next B.C. government to answer concerns about the high cost of doing business, government budget deficits, bureaucracy in delaying permitting of projects, public safety and acute labour shortages.
Greater Vancouver Board of Trade president Bridgitte Anderson says businesses remain in the dark about the economic platforms of the major parties.
Anderson says a recent parliamentary budget report painted a “dire” picture for B.C.’s finances that requires “billions of dollars that need to be cut or increased in taxes” for stability, and businesses are asking those who could form the next government “to show us a vision.”
“I think there’s a lot of voters who are undecided right now, within the business community and public at large,” Anderson says.
“This is a unique opportunity, and elections matter, campaigns matter. And this campaign will matter more than anything.”