$3B shortfall challenges B.C. finance minister

As government revenues plunge, B.C. taxpayers should brace themselves for a "very, very difficult" budget in two weeks, Finance Minister Colin Hansen is warning.

The government is desperately trying to maintain key services, but a $3-billion shortfall is making that a real challenge, Hansen said.

"We are desperately trying to maintain the critical services in health care and education and the social services. So it's definitely been a challenging summer," the finance minister said Wednesday.

In the last three months, British Columbia has faced a financial whipsaw, he said, including:

• Corporate income tax and personal income tax revenue — down by about $1 billion.
• Projected revenue from natural gas — down by about $500 million.
• Projected revenue from other natural resources — down by about $500 million. 
• Projected revenue from the social services tax — down by about $200 million.
• Spending on forest fires and social services — up by about $500 million.

Hansen didn't say how he plans to address the shortfall in two weeks when he introduces the first provincial budget since the government was re-elected in May, but it could translate into a larger deficit, higher taxes or more program cuts.

Last month, the minister said his government would not be able to meet its target of a $500-million deficit, as the B.C. Liberals promised during the spring election campaign.

In the February budget before the election, Hansen forecast B.C.'s total spending for the fiscal year would be about $39 billion.