B.C.’s First Quarterly Report continues to forecast a balanced budget in each of the next three years thanks to built-in prudence that has helped offset the effects of lower commodity prices, economic volatility, and the high cost of the fire season, Finance Minister Michael de Jong announced today.
The year-end surplus for 2015-16 is now projected to be $277 million, down $7 million from Budget 2015. Revenues have improved by $374 million, primarily due to stronger income tax revenues from previous years and higher property transfer tax revenue reflecting a strong housing market. Government spending is forecast to increase by $381 million, mainly due to the cost of fighting forest fires.
The Province is forecasting modest surpluses of $336 million in 2016-17 and $388 million in 2017-18, down slightly from the budget forecast.
Government’s continued spending discipline is reflected in further improvements in the province’s debt affordability. Taxpayer-supported debt for 2015-16 is projected to be $857 million lower than forecast at Budget 2015, and the direct operating debt – money borrowed in the past to fund programs and services – is forecast to be $745 million lower than forecast at Budget.
As government continues to successfully manage taxpayer-supported debt, the direct operating debt is on track to be fully eliminated by 2019-20, which will mark the first time B.C. will have had no direct operating debt in over 40 years – since 1975-76.
B.C.’s real GDP is forecast to grow by 2.0% in 2015, down 0.3 percentage points from Budget 2015, followed by growth of 2.4% in 2016 and 2.3% in the medium term. Year-to-date data show B.C. employment and exports are slightly below levels expected earlier this year. However, many indicators of B.C.’s economic performance so far in 2015 show stable domestic activity, and retail sales and housing starts are performing better than expected compared to Budget 2015.
Finance Minister Michael de Jong ─
“This quarterly update shows our fiscally prudent plan is working. Not only are we on stable economic footing in the face of turbulent economic conditions, but we’re positioned to return British Columbia to a place without direct operating debt for the first time in more than 40 years.”
- Revenues are forecast to improve by $374 million. This reflects additional revenue from prior-year personal and corporate income tax assessments and strength in property transfer tax revenue.
- Expenses are forecast to be higher by $381 million. This includes $317 million in higher direct fire costs, plus other statutory spending, partly offset by lower debt servicing costs and other expense changes.
- Based on the first quarterly report forecast, by 2017-18 government’s direct operating debt will be at its lowest level since 1985-86. At the current rate, it will be completely eliminated by 2019-20. The last time B.C. had no direct operating debt was 1975-76.
- Retail sales advanced 7.6% year-to-date to June 2015, boosted by notable gains at food and beverage stores, motor vehicle and parts dealers, as well as building material and garden equipment and supplies stores.
- Year-to-date housing starts to July averaged about 31,800 annualized units, an increase of 17.7% over the same period in 2014.
- The value of B.C.’s merchandise exports was up 1.0% year-to-date to July 2015, over the same period last year. This reduced rate of growth reflects lower prices for metals, minerals and energy products alongside less global demand.
British Columbia’s 2015-16 First Quarterly Report is available online: https://news.gov.bc.ca/files/BC-Budget_2015-16_Q1_Report.pdf
A copy of the 2015-16 First Quarterly Report powerpoint presentation is available: https://news.gov.bc.ca/files/First_Quarterly_Report_2015.pdf