B.C. has posted a $1.5 billion budget surplus for 2018-19 stemming in part from a $2.9 billion increase in revenues over budget, Finance Minister Carole James said Thursday as she released the 2018-19 public accounts.
“We are on a very strong fiscal footing,” James said. “I’m really proud of the work we’ve done.”
The good news means B.C. now has a total debt of $65.9 billion, which is $3.06 billion lower than estimated in the budget but still an increase from $64.9 billion debt of the previous year.
James said increased revenue to allow for a balanced budget came about in part because B.C’s economy grew by an estimated 2.4% in the 2018 calendar year; the province had Canada’s third highest growth.
Total revenue was $57.1 billion, up $5 billion from the previous year and significantly from the $46 billion in 2014-15.
Liberal finance co-critic Shirley Bond didn’t share James’ optimism, saying the NDP’s 19 new or increased taxes mean the primary source of revenue remains the taxpayers.
“Revenues were largely driven by federal transfers, which are expected to go down next year,” Bond said.“ICBC lost $1.2 billion; John Horgan will drive our debt-to-revenue ratio to the brink of 90 per cent, which will put our AAA credit rating at risk; and property transfer revenue was down more than $400 million last year.”
Tax revenue increased by $4.4 billion or 15.5%. Personal income tax revenue rose by $2.44 billion or 27.4%, an increase documents said mainly reflect estimated household income growth, higher prior year tax assessments and new tax policy measures.
Corporate income tax revenue increased by more than $1 billion or 24.4% due to increased federal government instalments and prior year settlements, documents said.
Property transfer tax revenue decreased by $315 million, or 14.7%, a shift the government attributed to weaker housing sales.
All other tax revenues increased by $788 million, documents said.
Forestry revenue increased by $341 million for the year, reflecting an increase in the sector’s proportion of government revenue; it grew to an increase of 45.2% in 2018-19 from 39.5% in 2017-18.
Petroleum, natural gas and mineral revenues decreased by $21 million from 2017-18, accounting for 33.3% of natural resource revenue, compared with 39.2% in 2017-18.
Water and other resource revenue increased by $93 million in the year, comprising 21.5% of B.C.’s natural resource revenue.
James said the debt-to-GDP ratio is 14.5%, the third lowest in Canada, after Saskatchewan and Alberta.
Improved economic growth, higher household incomes and strong 2017 income tax returns led to $2.9 billion in increased revenue.
Economic growth was led by goods-producing industries with gains in mining, quarrying and oil and gas extraction, construction and manufacturing.
New taxes such as the employer health tax and the real estate speculation tax added $464 million and $115 million, respectively, to provincial coffers.
And, James noted, the natural resources sector has yielded higher dollars, primarily in the area of forestry stumpage rates.
James stressed that taxpayer-supported debt is down.
She repeated that B.C.’s operating debt was eliminated for the first time in 40 years, contributing to a $926 million decrease in taxpayer-supported debt.
James said health care, education, economic development and significant wildfire, emergency response and preparedness activities in the natural resources sector received $2 billion in increased spending.
The minister remained upbeat about B.C.’s economic future, noting the province had the lowest Canadian unemployment rate at 4.7% in 2018 – a decrease from 5.1% in 2017.
And, she said, wage and salary growth also led the country at 5.9% in 2018, and B.C. continues to rank among the top provinces for wage growth this year.
James said dealing with ICBC’s ongoing problems remains a concern for the government, particularly Attorney General David Eby.
She said the public accounts show the insurance Crown corporation’s fiscal challenges stabilized as forecast in the third quarter with a net loss of $1.2 billion, some $174 million lower than the prior year's $1.3 billion net loss.”
“We’re monitoring that very closely,” James said. “It continues to be a large risk in the budget.”
Ministry documents show expenses increased by $3.887 million over the previous year and were $1.969 million higher than budget.
Increases in spending were mainly in the natural resources, health, protection of persons and property and education sectors for service delivery requirements and wildfire activities, James said.
Spending on health and education portfolios led with price tags of $22 billion and $14 billion, respectively.
“Government spending on programs and services increased by $3,887 million in 2018-19,” documents said. “The province increased spending on the health
Sector by $1,224 million (5.8%), the education sector by $994 million (7.6%), the social services sector by $606 million (12.8%), the natural resources and economic development sector by $451 million (13.4%), the other sector by $257 million (16.5%) and spending in all of the remaining sectors increased by $355 million over 2017/18.”
Some $4.45 billion was spent on infrastructure spending on hospitals, schools, post–secondary facilities, transit and roads – $722 million lower than budget, mainly due to project scheduling changes, James said.
Self–supported infrastructure spending on electrical generation, transmission and distribution projects and other capital assets totalled $4.1 billion, documents said.
The numbers are a dramatic shift from a year ago.
The 2017-18 public accounts showed an operating surplus of $301 million, a figure that was $55 million higher than the surplus forecast in the previous fall’s budget update. That surplus had been maintained despite the government boosting spending on programs by almost $3 billion as well as covering significant expenses from disastrous 2017 wildfires.
The Liberals said the public accounts represent last year’s numbers and tell British Columbians nothing about any roadmap the NDP may have for the future.
“What John Horgan and the NDP don’t want to talk about today are all of the signs that our economy is trending in the wrong direction— and the fact their failed tax policies are beginning to drive our competitiveness backwards,” Bond’s co-critic Tracy Redies said. “As our housing sector struggles with housing starts down and construction projects coming to a halt and businesses continue to raise alarm bells about the province’s deteriorating competitiveness, the NDP clearly has no plan for our economy and how to ensure it can provide hard-working British Columbians the opportunities they deserve.”
Financial Statement Discussion and Analysis Report - http://bit.ly/2XOnHlD