British Columbia is forecasting a $7.9 billion deficit in an election-year budget packed with new spending, housing measures and affordability initiatives.
The spending comes with a significant increase in the provincial debt and amid projections of slowing economic growth.
Finance Minister Katrine Conroy unveiled the budget conceding a difficult economic environment, but arguing belt-tightening would be irresponsible as the public faces tough times.
“What would be reckless would be to make cuts in this province,” she said.
“ We cannot afford to have a deficit of services. There are tough choices to be made.”
Budget highlights include an expansion of the BC Family Benefit and a new one-time Electricity Affordability credit for 2024, a beefed-up carbon tax rebate and an exemption on the property transfer tax for first-time homebuyers.
The province is also delivering on a key ask from the business community, by raising the payroll threshold for the Employer Health Tax.
Housing speculators are being targeted with a new house-flipping tax, which will be applied to profit on homes sold within two years of purchase.
And in a surprise move, the province is making one round of in-vitro fertilization treatments free for people looking for help to have a child.
Billions in new program, capital spending
British Columbia’s operating budget will climb by over $6 billion to more than $89 billion this year, with another $18.7 billion earmarked for capital projects.
Initiatives aimed at easing the cost of living will cost the province more than half a billion dollars in 2024, including $248 million to boost the provincial family benefit and $370 million for a BC Hydro electricity credit.
The province projects the average family will now see a $445 increase in its family benefit, while BC Hydro customers will save about $100 per year.
And the province’s carbon tax credit will also get a boost this year, for $100 million.
Health spending continues to be the province’s biggest area of spending, comprising more than a third of the operating budget and $1.62 billion in new program spending for 2024.
That includes $34 million per year for the IVF program, $90 million per year for BC’s cancer action plan, and $45 million per year to improve services for community and long-term care for seniors.
On the housing front, the province is spending $102 million per year on an exemption to the property transfer tax for first-time homebuyers.
The province is also funding $50 million in new operating spending and $13 million in capital spending for its BC Builds program, aimed at incentivizing new rental housing construction.
Education program spending is also getting a $306 million boost, to deal with surging enrollment that topped 13,000 new students last year. More than a third of that money is earmarked to hire new teachers and specialists.
The budget also earmarks $174 million in new money for responding to climate emergencies in 2024, and $130 million in new spending for courts, corrections, and other justice and public safety initiatives.
Despite big spending in some areas, there was no significant new money allocated to key areas, including new mental health and addiction beds or transit infrastructure.
Cooling economy, rising debt
With government coffers flowing freely, B.C.’s total provincial debt is forecast to climb by nearly $20 billion to $123.2 billion. Of that, $88.6 billion in debt is supported by taxpayers, up from $71.8 billion last year. The taxpayer-supported debt-to-GDP ratio, a key measure of debt affordability, will climb to 21 per cent, up from 17.6 per cent last year.
For comparison, budget 2018 – the NDP’s first full-year budget after taking power – laid out a total debt of $69.3 billion, a taxpayer-supported debt of $45.2 billion and a taxpayer-supported debt to GDP ratio of 15.5 per cent.
The cost of servicing the debt will climb to $4.1 billion this year, up from $3.3 in the previous year’s budget.
Despite this, Conroy described the spending as “affordable,” downplaying the potential effects on B.C.’s borrowing capacities.
B.C.’s debt burden, she said, remains assessed at 3.2 cents per dollar of revenue, less than half of Ontario and Quebec’s debt servicing costs.
“I am not going to presuppose what the rating agencies are going to do,” she said.
“But I know right now this is the right direction to move in.”
The wave of new spending comes with the province’s economy forecast to grow just 0.8 per cent in 2024, down from 1 per cent in 2023. The province forecasts growth will return to 2.3 per cent in 2025.