Despite ongoing uncertainty from the COVID-19 pandemic, current forecasts show an increase in revenues and a reduction in the deficit for the 2021-22 fiscal year as British Columbia’s strong vaccination rates are supporting a swift economic recovery in many sectors.
In the Province’s first quarterly report, the year-end deficit is projected to be $4.8 billion – roughly half of what was previously predicted in Budget 2021. This improvement is attributed to stronger-than-anticipated recovery in many sectors of the economy, leading to higher-than-expected revenues.
“We have all been impacted by the pandemic, and the collective actions of British Columbians have brought us through this unprecedented challenge together. This is the driving force behind B.C.’s faster-than-expected economic recovery and our improved outlook,” said Selina Robinson, Minister of Finance. “Because of this shared commitment, we’ve been able to see strong recovery in many sectors, while we continue providing targeted supports to the people and businesses that need it. The strong performance this quarter puts B.C. in a better economic and fiscal position than originally anticipated.”
The Province’s first quarterly report saw an overall increase of $6.2 billion in provincial revenues compared to Budget 2021. This is primarily due to gains in personal and corporate income tax revenues, natural resource revenues and federal funding largely related to B.C.’s pandemic response and recovery measures, as well as child care.
Upward changes to revenue are partially offset by higher expenses, mainly due to this year’s devastating wildfires and additional spending for the delivery of key services, as well as federally funded investments in early learning and child care and improvements in long-term care facilities.
B.C.’s real gross domestic product (GDP) is forecast to see continued strength, growing by 6% in 2021 and, as the recovery continues, by 4% in 2022. Higher retail sales, exports and housing activity, as well as total employment surpassing pre-pandemic levels, all contribute to an improved outlook for British Columbia.
While the Province’s fiscal outlook shows improvements from Budget 2021 based on the first quarter, there continues to be an elevated level of uncertainty in the revised forecast as a result of the evolving pandemic in the province and globally. The forecast allowance will remain unchanged to provide continued prudence.
“Since Budget 2021 was introduced five months ago, we’ve seen significant shifts in projections for B.C., Canada and around the world as the pandemic evolves, and we know we will see more changes as we move through recovery,” Robinson said. “Our job is to be prudent to ensure we are able to continue supporting the people and businesses of our province as we continue through pandemic response and recovery in the months ahead.”
As announced in Budget 2021, the Province allocated $3.25 billion in Pandemic and Recovery Contingencies to address health and safety measures related to COVID-19, targeted supports for businesses and people most affected by the pandemic, and additional funding to build B.C.’s economic recovery. This funding is in addition to last year’s spending of $10.1 billion to help support people, businesses and communities through the pandemic and into recovery.
Key supports provided to date as part of this spending include the COVID-19 paid sick leave employer reimbursement program, the Small and Medium Sized Business Grant program and the Circuit Breaker Business Relief Grant program to support businesses affected by closures, funding to support return to school measures in the K-12 sector, supports for the tourism sector, as well as one-time grants for B.C.-based events through the new Fairs, Festivals and Events Recovery Fund.
As committed to in Budget 2021, government will present a detailed path and timeline of how it intends to return to balance as part of Budget 2022.
To read B.C.’s First Quarterly Report, visit: https://www2.gov.bc.ca/gov/content/governments/finances/reports/quarterly-reports
A backgrounder follows.
For translations: https://news.gov.bc.ca/25337#translations