Finance Minister Colin Hansen unveiled a “status quo” budget on Tuesday that includes a $925 million deficit designed to give the next premier “flexibility” in future budgets.
According to the budget, debt in B.C. is expected to reach $53 billion this year, including $2.4 billion in interest.
That means that $0.046 of every revenue dollar will be put toward debt interest.
The budget states that B.C.’s deficit for 2010-11 was $1.265 billion, which is roughly a $450 million improvement from the figure forecast in budget 2010.
At $17.5 billion, health-care costs take up 42% of the 2011 budget.
Healthcare costs are projected to grow 6% in 2011.
“Budget 2011 stays the course, keeping the focus of protecting health care, education and social services as British Columbia moves toward balanced budgets beginning again in 2013,” the government said in budget materials.
At $600 million for 2011, B.C.’s largest contingency fund in recent history is to give the next premier – who will be elected by the BC Liberal party on February 26 – breathing room.
Or in the budget’s words, the fund will “help manage unexpected pressures and fund priority initiatives.”
A $350 million forecast allowance in each of the next three years is “to guard against revenue volatility.”
The Investment Industry Association of Canada (IIAC) gave the budget high marks for aiming to balance the books while keeping personal and business income taxes low.
”While the budget did not define a strategic vision for fiscal policy in the longer term, in light of the imminent leadership vote, it achieves its short-run policy objectives of balancing finances and stabilizing the debt burden,” IIAC president and CEO Ian Russel said in a statement.
“Progress on deficit reduction gives assurance that personal and corporate tax rates will remain competitive in future years and promote capital formation and job creation in the province.”
The Vancouver Board of Trade gave the budget an A-minus.
It gave the budget an A-plus on spending; an A-minus on tax competiveness and a B-plus on debt management.
“It uses conservative revenue estimates while keeping total cost increases at reasonable levels,” said Bernie Magnan, chief economist of the board, in a statement.
“The board recognizes the government’s continued resolution to lower business taxes, especially for small business, but it is somewhat disappointed the government did not address the issue of changing the level at which the Property Transfer Tax increases to 2%,” stated the board.
The Economic Forecast Council, which advises the finance ministry, said growth rates should approach historical levels in the years to come.
Its growth forecasts are 2.7% in 2011 and 3% in 2012.