B.C. will run deficit in 2009: finance minister

British Columbia will run a deficit for the next two fiscal years, Finance Minister Colin Hansen said Monday afternoon in Vancouver.

"We are continuing to see deterioration in world economies and this has eroded earlier projections for the province in 2009," said Hansen.

Hansen blamed falling prices and shrinking markets for lumber and natural gas, two of the largest exports for the province, for the decline in provincial revenues.

He also pointed to declining consumer spending and housing sales, and rising unemployment, for lowering revenue forecasts.

Just last November, Hansen had predicted that B.C. would duck the looming global recession without running a deficit, maintaining economic growth of about 0.6 per cent.

Hansen said the revised forecasts now predict no economic growth for the province in the coming year, with improvements coming in 2010 due to the economic stimulus of the Winter Olympic Games.

"The longer term outlook for 2010 continues to show strength and British Columbia is well positioned to rebound as the Canadian and world economy recovers."

Premier Gordon Campbell said the severity of the global financial crisis made it impossible to run a balanced budget without slashing important health-care and education funding.

"I've been pretty clear," Campbell said. "I hate deficits. I think they take away from future generations, but the changes we've seen have come too fast. They've been too big."

Senior executive staff to be reduced

To mitigate the deficit, Campbell said, there will be budget cuts, primarily through slashing the senior executive ranks of the civil service, which will be reduced by 20 per cent.

The president of the BC Government and Service Employees Union, however, believes the general public will feel the impact of those jobs cuts.

"So services are going to be cut," Darryl Walker said. "Still, we need more clarification. And we really need the premier and the minister of finance to come clean."

Walker said he fears social workers and those who provide services for women and children will bear the brunt of job losses.

Campbell said his government would recall the legislature early next week to table a bill that would suspend current legislation that requires the Liberal government to present a balanced budget on Feb. 17.

Maureen Bader of the Canadian Taxpayers Federation said the Liberals should have done more.

"We have a balanced budget law so that when the going gets tough, the governments — these politicians — can actually stand up and say, 'No, we need to make the tough decision to keep this budget balanced,' " Bader said. "But instead of making the tough decisions, we've got a premier and finance minister who are just rolling over."