Fiscal discipline, controlled spending, and prudent revenue forecasts have delivered a balanced 2014-15 budget, a better-than-forecast debt-to-GDP ratio, and a reduced direct operating debt, Finance Minister Michael de Jong announced today with the release of the 2014-15 Public Accounts.

The Province ended the 2014-15 fiscal year with a surplus of $1.68 billion, with revenues $1.3 billion higher than forecast in Budget 2014 and expenses $23 million higher than forecast. The higher revenues were mainly due to increases in tax revenue and stronger net earnings of self-supported Crown corporations, partially offset by decreases in contributions from the federal government and other revenues, including lower natural resource revenue.

Government increased program spending by $1 billion compared to 2013-14, including an additional $508 million on health (up 2.8%) and $42 million in the social services sector. Total education spending was consistent with the previous year at $11.8 billion. An additional $436 million was spent on natural resources and economic development over the previous year, primarily for wildfire response, funding to support LNG, the environment and economic development.

Government also invested $3.4 billion in capital projects around the province in hospitals, schools, post-secondary facilities, transit and roads. Projects of note include the redevelopment of B.C. Children’s and Women’s Hospital in Vancouver, the Surrey Memorial Hospital Emergency Department and Critical Care Tower, replacement of Oak Bay Secondary, planning and preparations for the George Massey Tunnel replacement, and Highway 1 improvements.

Taxpayer-supported debt to GDP - a key measure of affordability - was lower by nine-tenths of a percentage point to 17.5%, an improvement over the Budget 2014 forecast of 18.4%.

Total provincial debt, which is a combination of taxpayer-supported debt and self-supported debt, increased by $2.2 billion, or 3.6%, in 2014-15 to $62.9 billion, as government continued to invest in capital projects. This increase in total provincial debt is $1.8 billion less than forecast in Budget 2015. The amount reflects an increase to taxpayer-supported debt of $812 million and an increase to self-supported debt of $1.4 billion. Government direct operating debt — including money borrowed to fund programs and services during the global economic downturn — decreased by $943 million.

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Preliminary GDP growth numbers show the provincial economy grew 2.6% in 2014, better than the Budget 2014 forecast of 2% and ahead of the Canadian average of 2.4%. The provincial annual average unemployment rate for 2014 was 6.1%, better than the previous year’s rate of 6.6%.

British Columbia continues to maintain a strong credit rating with all three major credit rating agencies. Standard and Poor’s and Moody’s Investors Services have affirmed the Province’s rating at Triple-A, while upgrading the outlook to stable. Dominion Bond Rating Service has affirmed the Province at a rating of AA (high). Standard and Poor’s recently cited B.C. as having the best financial management practices among all of the provinces.

Online versions of the Public Accounts and related documents are available at: http://www.fin.gov.bc.ca/ocg/pa/14_15/pa14_15.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

Government purchasing card transactions are now published quarterly on Data BC http://catalogue.data.gov.bc.ca/dataset/purchase-card-and-bta-transaction-data-fy14-15

A copy of the Public Accounts 2014/15 powerpoint presentation is available:
http://www.newsroom.gov.bc.ca/downloads/Public Accounts 2015.pdf

Quotes:

Minister of Finance Michael de Jong ─

“Thanks to the determination of British Columbians to maintain a balanced budget, the Province is on a steady and firm fiscal path. This determination allows us to continue repaying the money borrowed to protect programs and services during the global economic crisis, and continue modest new investments in priority programs — the dividend that flows from a balanced budget.”

“While our fiscal position last year was strong, we continue to see ongoing challenges in Canada, the U.S., and our major trading partners. This means we must continue to be disciplined and sustain our commitment to only spend on programs what taxpayers can afford to contribute.”

A backgrounder follows.

Media Contacts:

Jamie Edwardson
Communications Director
Ministry of Finance
250 356-2821

BACKGROUNDER

B.C. delivers surplus for 2014-15

Surplus:

The Province ended the 2014-15 fiscal year with a surplus of $1.68 billion, $879 million more than forecast in the update provided with Budget 2014. Government remains on track to balance the 2015-16 budget.

Economic Growth:

British Columbia’s economy grew by an estimated 2.6% in the 2014 calendar year, the second-highest rate among the provinces and above the national average of 2.4%, according to preliminary GDP by industry data from Statistics Canada. The estimated 2.6% growth for B.C. in 2014 is higher than the government’s Budget 2015 forecast of 2.2%. The strongest gains among industries in 2014 were observed in mining, quarrying and oil and gas extraction (up 4.6%), retail trade (up 4.6%) and real estate, rental and leasing services (up 3.9%.) Also, the value of merchandise exports from British Columbia increased by 7.1% in 2014 despite unbalanced external demand for provincial products.

Revenue:

Provincial revenue totalled $46.1 billion in 2014-15, an increase of $2.4 billion over 2013-14, driven primarily by increased taxation revenue, earnings from self-supported Crown corporations and investment income.

The Province received more taxes than expected, which underlies a strong economy. Tax revenue increased by $899 million compared to the forecast in Budget 2014. Provincial sales tax revenues were up by $322 million in line with growth in consumer expenditures on retail and business investment while corporate income tax generated an additional $208 million. Property transfer taxation yielded an additional $128 million in response to increased activity and rising values in the property market. All other taxes increased by $254 million.

Natural resource revenues decreased by $18 million from 2013-14. Water power revenue and other resource revenues decreased $74 million due to lower power production from less rainfall and snowpack. Forest revenue increased by $35 million due to economic recovery.

Petroleum, natural gas and mineral revenues increased by $21 million, mainly due to natural gas royalties from an increase in production, but returns were partially offset by a royalty price decrease. Natural gas prices averaged $2.46 in 2014-15, down $.11 from the $2.57 level in 2013-14.

Expense:

Operating expenses totalled $44.4 billion, a $1.0-billion increase from 2013-14 and $354 million less than forecast in Budget 2015.

Debt:

The taxpayer-supported debt to GDP ratio, a key measure of affordability, was 17.5% in 2014-15, lower than the 17.7% forecast in Budget 2015.

Total provincial debt, the most commonly used measure of debt, was $62.9 billion for 2014-15. Debt increased by $2.2 billion over 2013-14. This was due to increased borrowing to fund capital projects.

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.

Capital Spending:

Net investment in taxpayer supported capital was $3.4 billion to build and upgrade schools, universities, colleges, hospitals, roads, bridges and other infrastructure to deliver programs and services.

Media Contacts:

Jamie Edwardson
Communications Director
Ministry of Finance
250 356-2821