British Columbia Finance Minister Mike de Jong introduced a balanced budget for 2014-2015, noting the only other province to do so this year is possibly Saskatchewan (full story here). Here are some highlights:
By the numbers
“We continue to balance on a razor’s edge.” – Mike de Jong
The province projects a budget surplus of $175-million for the fiscal year ending this March, fulfilling the Liberals’ election pledge. The surplus is somewhat more than what Mr. de Jong predicted at the end of the third quarter – $165-million – but it is smaller than the $197-million surplus projected in last February’s budget.
The budget surplus for the upcoming year is forecast to be $184-million. Economic growth is expected to be two per cent.
The provincial debt for 2014-2015 is projected to be $64.7-billion.
“I don’t want to suggest a cascade of dollars flowing into the Prosperity Fund in the next five years.” – Mike de Jong, referring to the fund established last year to use profits from liquefied natural gas for, among other things, paying down provincial debt
Last year, British Columbia had promised to outline how it planned to levy taxes to realize the government’s much-touted dream of LNG riches, leading to a debt-free province. But Mr. de Jong was forced to admit the complexities of coming up with the regime mean the details will not be available until fall.
The government does not expect the first plant to begin production until 2018, and revenues are not expected to begin until after that.
Tuesday’s budget included the structure of how that tax regime will work: a two-tier system with a 1.5-per-cent tax applying for the first three years, transitioning to a tax of up to seven per cent by the sixth year and beyond.
The exact tax rate for the second phase will be introduced in the fall after an assessment of global and provincial conditions.
Measures for individuals
“Admittedly, the tax relief in this budget is pretty thin.” – Mike de Jong
In an effort to get into the black and to bolster an election campaign based on a balanced budget, the Liberal government introduced several new taxes on individuals last year.
The 2014-2015 plan has fewer of those. Medical Services Premiums, boosted last year, continue the pre-arranged climb. Effective Jan. 1, 2015, the premiums will rise by about four per cent, amounting to about $5.50 a month for a family of three or more.
Tobacco taxes will rise as of April 1 by 32 cents per pack. That is over and above the increase announced last week in the federal budget.
The B.C. Training and Education Savings Grant – a one-time payment for children born in B.C. in 2007 or later and whose parents have contributed to a registered education savings plan – kicks in with payments of $1,200 per child by the end of the coming fiscal year.
As well, starting in April 2014, the B.C. Early Childhood Tax Benefit of $55 per month per child under the age of six will begin to be paid out. The benefit is income-tested.
“We’re not going to ask taxpayers to shoulder this burden on their own. We see the potential for partnerships with the industrial sector.” – Mike de Jong on skills training
Funding for advanced education actually drops by just over $16-million, which the government says is a result of finding efficiencies and not cutting student services. Critics, however, question whether the number can reflect the government’s stated priority on skills development.
Provincial funding for Kindergarten to Grade 12 nudges up barely, with a $22-million increase over last year.
The spending estimates make no provision for higher expenses due to a judge’s ruling last month ordering the province to reinstate contract language for teachers that was in place prior to 2002. The language, wiped out by the Liberals, dictated class sizes and composition, and Education Minister Peter Fassbender has said following the ruling would cost $1-billion.
The province has filed its intention to appeal. If it loses, the money to pay for it this year would wipe out the $300-million contingency fund intended for unforeseen disasters such as forest fires and floods.
“We have more work to do.” – Mike de Jong on job creation
The government is devoting $29-million over three years to push the LNG strategy forward.
Another $9-million has been pledged for environmental assessments of resource development of proposed LNG facilities, as well as pipelines, mining and other major projects.
The province has also underlined a commitment of $5-million over five years to the Aerospace Association of Canada Pacific Division.
Still, Mr. de Jong acknowledged jobs growth isn’t where the province would like it to be, noting that though employment has been stable, job growth has been flat.
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