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South Okanagan Photos

Another $328 million added to the BC deficit

VICTORIA – The government of B.C. is holding the line on fiscal prudence and continues to reduce and control government spending to address declining revenues, Finance Minister Michael de Jong said today with the release of the Second Quarterly Report.

The projected deficit for 2012-13 is $1.47 billion, a $328-million increase from the First Quarterly Report due primarily to the change in the completion date of the sale of the **Little Mountain property. Higher revenues from personal and corporate income taxes resulting from higher tax assessments in 2011 are offset by decreased revenues from property tax and property transfer tax, and a decline in coal prices. Overall revenue is down $202 million from the First Quarterly Report projection.

Ministries continue to reduce discretionary spending to mitigate the $241-million impact of the natural gas market on revenues. Government has identified $176 million so far this year and is on target to find the remaining $65 million required, including through savings in government operations such as travel and discretionary spending, freezing salaries for public sector management, and continuing the public service hiring freeze. Despite numerous changes in components of the 2012-13 forecast, there is no increase to overall projected government spending in 2012-13 compared to the forecast in the First Quarterly Report.

B.C. will maintain a forecast allowance of $100 million as a buffer against future economic and fiscal risks. This allowance has been reduced $50 million from the First Quarterly Report, as the risks to the forecast will have a reduced impact midway through the fiscal year.

At $6.9 billion, total capital spending is projected to be $152 million lower than Budget 2012. The taxpayer-supported debt forecast stands at $38.47 billion—$205 million lower than the projection in the First Quarterly Report, reflecting lower borrowing for operating purposes. The lower debt reduces the taxpayer-supported debt to GDP ratio by 0.1 percentage point from the First Quarterly Report to 17 per cent.

B.C. remains on track for re-implementation of the PST on April 1, 2013, with all previously permanent exemptions in place. Government has released several publications for B.C. businesses providing plain-language guidance on the application of PST and related exemptions, subject to approval of the legislature. Businesses are also being encouraged to register for the PST by Jan. 2, 2013.