While governments around the globe face worsening deficits and debt, British Columbia ended the fiscal year with a smaller deficit than was forecast at the third quarter, Finance Minister Kevin Falcon announced today with the release of the 2011-12 Public Accounts.
The Province ended the fiscal year with a deficit of $1.84 billion, which included the one-time repayment of $1.6 billion of HST transitional funding. Excluding that one-time repayment, the Province would have posted a deficit of $241 million. Through continued prudent fiscal management, government is on track to eliminate the deficit and return to a balanced budget in 2013-14.
The provincial economy grew 2.9 per cent in 2011, according to preliminary data from Statistics Canada, third among provinces and better than the national average rate of 2.6 per cent. Total revenues increased by $1.05 billion in 2011-12, led by stronger tax revenue reflecting growth across the economy.
Total government spending was $926 million higher than forecast in Budget 2011, primarily due to the $1.6-billion, one-time repayment of HST transitional funding to the federal government. Excluding the one-time HST repayment, overall government spending was held to an increase of 2.6 per cent, compared to the Budget 2011 forecast of 4.3 per cent.
Taxpayer-supported capital spending was $3.6 billion for investments in schools, universities, health-care facilities and other capital infrastructure. The Province's ratio of taxpayer-supported debt to GDP, a key measure of affordability, ended the year at 16.4 per cent-one of the lowest in North America and below the 17.5 per cent forecast in Budget 2011. Taxpayer-supported provincial debt increased $2.8 billion in 2011-12 - approximately $2.1 billion less than forecast in Budget 2011.
While once again results were better than expected, B.C. remains in a period of great economic uncertainty with continued fluctuation in commodity prices and potential economic impacts from the ongoing European debt crisis.
British Columbia continues to maintain the highest credit rating possible with Standard & Poor's and Moody's Investors Services Inc. at Triple-A. Dominion Bond Rating Service has affirmed the Province at a rating of AA (high).
The Balanced Budget and Ministerial Accountability Act requires a 20 per cent ministerial salary holdback for all members of cabinet to ensure ministries operate within their own budgets and government meets its overall financial commitment. As the government posted a deficit for 2011-12, cabinet members lose 10 per cent of their salary. All ministers achieved their individual ministry fiscal targets and will receive the other 10 per cent of their salary holdback. The Ministerial Accountability Report, released today, outlines the specific financial targets ministers must achieve to receive their ministerial salary holdback.
- Online versions of the public accounts and related documents can be found at the following link: www.fin.gov.bc.ca/ocg.htm
- Unaudited Public Accounts supplementary data sets including salary information, travel expenses and payments to suppliers are available on the Data B.C. website at: www.data.gov.bc.ca
Kevin Falcon, Minister of Finance and Deputy Premier -
"British Columbia stands out globally as a safe harbour for investment because our government continues to keep spending and debt under control. The huge debt and deficits facing European governments clearly shows the perils of the tax-borrow-and-spend mentality."
"Through prudent fiscal management, British Columbia is on track to eliminate the deficit and return to a balanced budget by 2013-14."
A backgrounder follows.
Ministry of Finance
The Province ended the 2011-12 fiscal year with a deficit of $1,840 million, $657 million lower than the February 21, 2012 updated forecast. Government is on track to eliminate the deficit and return to a balanced budget in 2013-14.
British Columbia's economy grew by 2.9 per cent in the 2011 calendar year, which is better than the national average rate of growth of 2.6 per cent, according to preliminary data from Statistics Canada. Growth was widespread across most industries. Retail sales, an indicator of consumer confidence, increased by 3.1 per cent in 2011. Exports of goods and services from British Columbia grew 14 per cent in 2011 despite the slow recovery of the U.S. economy, the ongoing European debt situation and a strong Canadian dollar.
Provincial revenue totalled $40,998 million in 2011-12, an increase of $1,048 million over 2010-11, primarily due to higher tax revenue as well as minor increases in fees and licences, natural resource revenue and investment income. These increases were offset by decreases in contributions from the federal government and the net earnings of self-supported Crown corporations.
Tax revenue increased by $1,006 million (6 per cent) over 2010-11. Personal income tax revenue increased by $500 million over 2010-11, offset by a decrease in corporate income tax revenue of $29 million and a decrease in property tax of $7 million from 2010-11.
Social services tax (PST) and the hotel room tax were replaced by the harmonized sales tax on July 1, 2010. Harmonized sales tax revenue for the year was $5,779 million and social services tax revenue was $62 million, together approximately $335 million higher than the combined HST and social services tax revenue in 2010-11.
Contributions from the federal government decreased by $290 million from the previous year, largely due to the completion of federal transfer programs for infrastructure.
Natural resource revenues increased by $84 million (3 per cent) from 2010-11 to 2011-12. Petroleum, natural gas and mineral royalties increased by $48 million (3 per cent) and forest revenues increased by $37 million (8 per cent) over 2010-11. Other sources of natural resource revenue decreased by $1 million from 2010-11.
Operating expenses totalled $42,838 million, An increase of $2,639 million over 2010-11 and $926 million higher than forecast in Budget 2011, primarily due to the $1.6 billion, one-time repayment of HST transitional funding to the federal government and higher spending for health, education and social programs. Excluding the one-time HST repayment, overall government spending was held to an increase of 2.6 per cent.
In 2011-12, the Province increased total spending on health by $934 million compared to 2010-11; education spending increased by $67 million; and social services spending increased by $51 million over the previous year. Expenditures for health, education and social services represented approximately 74 per cent of the Province's total operating costs in 2011-12.
All other program spending increased by $1.59 billion, which mainly reflects the one-time repayment of HST transitional funding to the federal government, offset by reductions in other areas. Control of operating expense is a cornerstone of government's plan to balance the budget by 2013-14.
The taxpayer-supported debt to GDP ratio, a key measure of affordability, was 16.4 per cent in 2011-12, lower than the 17.5 per cent forecast in Budget 2011.
Total provincial debt, the most commonly used measure of debt, was $50,193 million in 2011-12. Debt increased $5,039 million over 2010-11. This was due to increased borrowing to fund capital projects and working capital requirements.
British Columbia continues to maintain one of the strongest credit ratings among Canadian provinces. Standard and Poor's and Moody's Investment Services each rate the Province triple A, the highest-possible rating, while Dominion Bond Rating Service rates the Province AA(high).
Taxpayer spending on capital was $3,571 million to build and upgrade schools, universities, colleges, hospitals, roads, bridges and other infrastructure to deliver programs and services.
Ministry of Finance