Despite a provincial deficit almost $1-billion less than expected, B.C. Finance Minister Colin Hansen is ruling out any new program spending because it might compromise the government's plan to balance the budget within three years.
"The fact that we came in a billion dollars less does not get us back to a balanced budget," Mr. Hansen said Thursday as the release of public accounts showed the deficit is $996-million less than the $2.8-billion forecast last September.
"We are still not projecting we are going to be out of deficit any sooner than we were projecting a year ago," said Mr. Hansen, who has forecast a balanced budget by 2013. "The sooner we can get this province back into a surplus position, the sooner we will have the opportunity to explore new programs and new fiscal measures."
Before the provincial election in May, 2009, the Liberals had predicted a $495-million deficit, but increased that projection to $2.8-billion after they won their third straight majority.
But figures released Thursday attributed the reduced deficit to various factors, including an $833-million reduction in expected government expenditures. Finance officials described other fluctuations in revenues and expenditures, including declines in tax revenues and increases in natural-resource revenues, that resulted in the revised deficit position.
The situation comes to light as the province receives the first $796-million instalment out of $1.6-billion from Ottawa for the controversial adoption of the harmonized sales tax, which meshes the provincial sales tax and goods and services tax into a single 12-per-cent levy.
"If it wasn't for the $1.6-billion we were getting transferred from the federal government, we would have had to make further cuts in program spending in order to get out of deficit by 2013/2014," Mr. Hansen said.
Bruce Ralston, the NDP finance critic, said Thursday's information reconfirms how badly the Liberals miscalculated when they announced the $495-million deficit.
"The deficit is now confirmed to be almost four times that. That's the end of the story," Mr. Ralston said in an interview.
Jock Finlayson, executive policy vice-president of the Business Council of British Columbia, acknowledged the deficit miscalculation, but noted the Liberal government was "blown out of the water" on its original budget projections by the economic downturn.
"Because they didn't let spending rip during the good times, we went into this downturn with healthier public finances than most other provinces. It means we're going to come out of deficit earlier than other provinces," he said. "These guys have a good record of expenditure management."
Under fixed-election-dates legislation, the next provincial vote is set for May, 2013. Mr. Finlayson said he would not be surprised to see a balance long before then.
The deficit means provincial cabinet ministers will be docked 10 per cent of their salaries because of the Balanced Budget and Ministerial Accountability Act.
Mr. Hansen said he would release a report Friday providing a full accounting of provincial spending related to the 2010 Winter Olympics.
Public accounts documents suggest provincial spending was a $765-million commitment, including $310-million in venues and live sites, $100-million in security costs and $79-million in Olympic contingency allocations.
Mr. Hansen said the final accounting would be somewhat higher than the $765-million predicted, but declined to be specific.