B.C. budget pushes deficit to $10.9 billion

The latest fiscal plan from the B.C. government — entitled "Standing Strong for B.C." — sets new records of provincial debt but is being defended by the finance minister as necessary to respond to U.S. tariffs and not cut essential public services British Columbians rely on.

"This is not a budget that has new splashy announcements," said Finance Minister Brenda Bailey about her first budget, the third under Premier David Eby, which has a forecasted deficit of $10.9 billion, an increase of 2024's then-record deficit, now forecasted at $9.1 billion.

Bailey said the budget prepares the province to "navigate these unchartered waters so we can put people first and support business as we build a stronger, more self-sufficient future."

The 2025-2026 fiscal plan calls for nearly $95 billion in spending with priorities such as $5.1 billion to build and upgrade hospitals, $1.4 billion for health-care services, and $1.5 billion to upgrade schools, which includes creating 261 new classrooms with prefabricated structures, the equivalent of 6,485 new seats.

It also sets aside $392 million for prefabricated school addition projects in 16 school districts.

The plan will bring in $84 billion in revenues, with lower deficit budgets planned for 2026 ($10.2 billion) and 2027 ($9.8 billion).

The province said the new fiscal plan was made under the assumption of 10 per cent U.S. tariffs on Canadian energy products and 25 per cent tariffs on all other goods. 

'We're going to win,' says premier

"We're going to pull together. We're going to fight, and we're going to win," said Eby in a special public address to the province made from the budget lockup Tuesday morning about B.C.'s response to tariffs.

The budget calls for $4 billion in contingency funds for 2025 and also in each of the next two fiscal plans. It's a slight increase from the $3.9 billion in the 2024 plan and will be used to offset pain expected from the U.S tariffs, which the province estimates will chop between $1.4 and $3.4 billion in yearly revenues.

Other 2025-2026 fiscal measures include:

• An ICBC rebate of $110.
• An average monthly increase of $400 to $700 for families under the Rental Assistance Program.
• A 30 per cent bump to the Shelter Aid for Elderly Renters (SAFER) program.
• $16 million in 2025 to target robbery, shoplifting and theft.
• Speculation and vacancy tax rate increases to three per cent for foreign owners, one per cent for Canadians.

To spur economic activity the province will increase a tax credit for video games and virtual reality companies from 17.5 per cent to 25 per cent and boost other tax credits to support Canadian-made films in B.C. and attract other production companies to the province, as well as fast track 18 major critical mineral and energy projects worth around $20 billion. 

The plan also calls for $47 million in annual infrastructure spending to strengthen supply chains to help get B.C. products to markets.

Emily Boston, a senior policy analyst with the Canadian Federation of Independent Businesses (CFIB) said the budget had no fiscal relief for the small and medium-sized businesses it represents.

"Which is especially disappointing considering that heading into a trade war with the United States, they're in an especially vulnerable situation," she said. "We need targeted support. We need tax relief."

What's unfunded

The capital funding announced in the budget does not include hospital towers in Nanaimo and Langley, which were key NDP election promises. 

Other key election promises not fully explained in the budget include involuntary care for people with unmet mental health and addiction issues. The province will spend $500 million over three years "to support and sustain addictions treatment programs established through previous budgets."

Another election promise, to provide low-interest financing to home builders to sell units to first-time home buyers for 40 per cent below-market rates, which would have cost $1.2 billion a year, was also not in the budget.

The B.C. Teachers Federation said there was no new spending in the budget for election promises that promised mental health counsellors in every school, and educational assistants in every kindergarten to Grade 3 classroom. 

The NDP has already backtracked on a $1,000 grocery rebate and middle-class tax cut, which would have applied to 90 per cent of British Columbians this spring but came with an estimated $1.8-billion price tag.

In the red

Under the new fiscal plan, the province's debt-to-GDP ratio — a measure often used by investors and credit rating agencies to analyze a government's ability to manage its debt load — is forecasted to rise to nearly 27 per cent from its current level of 23 per cent. It is forecast to go to 31 per cent in 2026 and then 34 per cent in 2027.

"Relatively favourably" is how Bailey described B.C.'s debt-to-GDP ratio outlook on Tuesday.

Total overall debt the province holds is expected to rise from $133 billion now to $209 billion by 2027.

"B.C.'s debt levels remain affordable compared to other jurisdictions," said budget documents.

'Disaster'

Carson Binda, the British Columbian director for the Canadian Taxpayers Federation, called the latest budget under the B.C. NDP an "outright disaster for taxpayers, families and small businesses" because of how it will nearly double the province's overall total debt in three years.

He expects B.C.'s credit rating, currently the envy of other provinces, to be downgraded.

Although the finance minister didn't explain how the province would get back to balanced budgets, Bailey said it was a priority so that ongoing deficit budgets didn't become "endemic."

She committed to "work very hard to get done a path to balanced budgets."

The current 2024 fiscal plan has an updated forecasted deficit of $9.1 billion, down from $9.4 billion in December, mostly due to increases in corporate tax revenue and ICBC's financial health.

Leading up to the budget, B.C. Conservative finance critic Peter Milobar said his party wouldn't give the NDP a "free pass" on blaming the province's fiscal health on the tariff war with the U.S.

"For what has really been their own lack of fiscal management over the last several years."