Even though his budget last year went from projecting a miserly looking tiny surplus to becoming almost embarrassingly awash in riches, don’t expect Finance Minister Mike de Jong to start doling out new spending any time soon.
The books on last year’s budget have now been signed off by the province’s auditor general, and that surplus ballooned from a mere $184 million to a much healthier $1.7 billion.
How did this happen?
First of all, the government was able to keep spending under control and stuck pretty close to its budget figures. Health-care costs keep going up and up (to the tune of about a half billion dollars a year), but they are not exceeding what was budgeted.
On the revenue side, the provincial economy performed better than expected last year, and so tax revenue to the government was up considerably over what was expected -- to the tune of almost a billion dollars.
Contributions from three Crown corporations also helped out big time. Notably, ICBC contributed more than $400 million more than forecast and the take from gambling and liquor was $132 million higher than originally thought.
But for all that good news, don’t expect it to continue in the coming year.
Right now, the country appears to be in a “technical” recession, which isn’t disastrous but indicates people are likely spending and earning less money.
The dramatic slump in oil prices is the biggest reason for the country’s economic slowdown, and B.C. is more protected from the oil nosedive than other provinces like Alberta, Saskatchewan and Ontario. But being better protected does not mean being immune to any of the downsides.
Many analysts predict the country’s economic growth rate will rebound in the latter half of the fiscal year but not to the point of showering provincial governments in cash windfalls.
Now, de Jong has created enough elbow room in this year’s budget to afford any kind of minor slide in economic activity. The projected surplus, forecast allowance and contingency fund equals close to a billion dollars (although this year’s forest firefighting costs will likely consume the entire $400-million contingency fund).
Of course, as we draw closer to the May 2017 provincial election de Jong will no doubt loosen his grip – slightly, and not all the way – on the government’s finances.
But that is still a ways off. In the meantime, don’t expect B.C.’s super-cautious Finance Minister to veer from a course he is strongly determined to follow, no matter how rosy last year’s books now look.
Keith Baldrey is chief political reporter for Global B.C.
