B.C.'s coffers have been bled dry by massive drops in personal income taxes and natural resource revenue.
The province is forecasting a $2.8 billion deficit in 2009/10 compared with the $495 million deficit it had forecast last February. The deficit is projected to be $1.7 billion in 2010/11 and a further $945 million in 2011/12, according to the September budget update released by Finance Minister Colin Hansen.
The state of B.C.'s economy also compelled the provincial government to table an amendment to its Balanced Budget and Ministerial Accountability Act. It extends the period that allows deficit budgets to be presented to the legislature to four years from two. Liberal Premier Gordon Campbell had previously stated that running a deficit would result in a 10% pay cut for cabinet ministers.
While the government had forecast receiving $6.562 billion in personal income taxes in 2009/10 this past February, it has lowered the estimate to $5.681 billion. The corporate income tax forecast also dropped to $1.409 billion in 2009/10 from the $1.529 billion predicted in February.
Natural gas royalties are now projected to net the province just $522 million in 2009/10, down from the $1.014 billion forecast last February. Revenue from forestry, which in February was forecast to generate $609 million in taxes in 2009/10, has dropped to $387 million. The industry had generated $558 million in 2008/09.
Total government revenue will decline to $37.61 billion in 2009/10, down from the $38.81 billion estimated in February.
Overall health spending is forecast to increase to $15.91 billion in 2009/10 from the $15.72 billion forecast in February with the additional $300 million going toward regional services.
Education spending increases slightly by $100 million to $10.89 billion from $10.79 billion with post-secondary spending receiving a bump at the expense of "other education." The government also plans to spend $151 million to provide the option of full-day kindergarten for 50% of five-year-olds in September 2010 and for all five-year olds by fall 2011.
Social service spending increases to $3.48 billion from the $3.41 billion estimated in February, with social assistance and child welfare gaining at the expense of "community living and other social services."
Natural resource and economic development spending climbed to $2.12 billion compared with the $1.84 billion forecast earlier this year.