B.C.'s Liberal government wrestled with the largest annual deficit in the province's history on Tuesday, Sept. 1 when it tabled its first budget update since the May election.
Finance Minister Colin Hansen projected a record $2.8-billion deficit for the current fiscal year, more than five times his forecast in February. He, and Premier Gordon Campbell, said the larger-than-expected shortfall was necessary because government revenues from personal and corporate taxes and natural resources had decreased due to the global economic collapse. Hansen predicted the province's economy will shrink by 2.9 per cent this year and grow by 1.9 per cent next year. He promised a return to balanced budgets in 2013.
Nicholas Simons, New Democrat MLA for Powell River-Sunshine Coast, said British Columbians are right to be angry and called the update a tax-and-cut budget.
"Less than four months ago we were told that the deficit would be $495 million; it's five times that figure, the largest deficit in B.C.'s history," he said. "Middle-income folks will be paying more. MSP premiums are going up for the second time. The Liberals raised them 50 per cent in 2002."
Despite that shortfall, Hansen said funding for health care, education and social services will all increase, while both personal and small-business taxes will be cut to the lowest levels in Canada.
Budget highlights include:
Basic personal income tax credit jumps 17 per cent to $11,000.
Small-business tax threshold increased from $400,000 to $500,000.
Families will pay an extra $6 a month in MSP (Medical Services Plan) premiums next year and an extra $18 a month by 2012.
Full-day kindergarten starts in the fall of 2010 for 50 per cent of five-year-olds. The other half begins receiving it in 2011.
Health budget increases 18 per cent over three years to $15.7 billion.
$420 million over three years to cover increased demand for welfare.
$347 million more this year to cover forest-fire costs.
HST (Harmonized Sales Tax) rebate for energy used to power or heat homes.
Despite a huge projected increase in social assistance, Simons said, there is nothing for advanced education or training.
"This government is out of gas and if they told the truth before the election they'd be out of office," he said.
There's another 19 per cent cut to the Ministry of the Environment on top of previous cuts, Simons pointed out, leaving monitoring and enforcement decimated.
"They kept blaming their deficit on the forest fire season -$500 million plus, but despite that, they're only budgeting $52 million for each of the next three years," he said.
The two largest deficits in B.C. history have been under Liberal governments, Simons added.
"We are in difficult financial times, but this government's cuts to education, the arts and programs for youth will create social deficits that our society will have to overcome in the future. Investment in the arts derives numerous benefits to communities, something this government clearly fails to see," said Simons.
