The B.C. government is on track to record an operating surplus of $374 million this year, despite billion-dollar losses at B.C. Hydro and the Insurance Corp. of B.C.
The province announced last week that it was writing off $1.1 billion in B.C. Hydro’s deferred debt to keep electricity rate increases below inflation for the next two years. ICBC is also on track to post a net loss of more than $1 billion this year, with both of those deficits to be covered by taxpayers.
Finance Minister Carole James presented the NDP government’s second full budget Tuesday, projecting B.C. to continue leading Canada in economic growth for the fiscal year that ends March 31. Surpluses are forecast to increase, with $274 million for 2019-20, $287 million the next year and $585 million for 2021-22.
Strong income and sales tax revenues continue to keep B.C. in the black, despite spending moves that include an increased child tax credit, eliminating interest on B.C. student loans and spending more than $900 million to develop the government’s CleanBC environment and climate plan.
B.C. Liberal finance critic Tracy Redies warned that the NDP government’s spending carries on as international economic indicators begin to soften.
“They’ve increased spending by 26 per cent since they took office, about $13 billion,” Redies said. “Taxation over that period has increased $10 billion, of which $6 billion is new taxes.”
— Tom Fletcher (@tomfletcherbc) February 19, 2019
Some of the revenue comes from the new employer health tax on payrolls, which B.C. began collecting Jan. 1 along with one more year of Medical Services Plan premiums, reduced by half after the NDP government took office. While businesses have indicated 2019 means double or triple their costs for payrolls above $500,000, James stressed that the savings for individuals outweigh the costs imposed on business.
“Even when you account for the revenue coming in from the employer health tax, it’s still a net cut of $800 million,” James said.
The payroll tax is also applied to municipalities, which continue to pay MSP premiums as specified in union contracts. Some B.C. communities are considering reducing police and other services to keep property tax increases to a minimum.
The three-year B.C. budget presented Tuesday includes an additional $1.3 billion in health care, including hiring additional doctors, nurses and support staff to continue establishing urgent primary care centres around the province.
Education spending is up $550 million over three years, much of it to finance the addition of 4,000 more teachers to the public education system since 2017.