Justine Hunter – August 31, 2009

The revised B.C. budget that Finance Minister Colin Hansen tables Tuesday – which is expected to project a significantly higher deficit than the version he offered up last February – assumes the worst is over for the province’s economy.

Mr. Hansen said Monday that most of the spending cuts have already been announced: the suspense mainly involves just how far he’ll stray from the $495-million deficit he was sticking to throughout the provincial election campaign in the spring.

In recent weeks, Mr. Hansen has become more pessimistic, warning government’s revenues have dropped by more than $2-billion while costs for health care, fighting forest fires, and welfare have climbed by at least half a billion dollars.

Will he top the province’s record deficit of $2.6-billion? “I am 100 per cent certain that we will end this year in a deficit,” was all he would say Monday.

While the opposition and other critics continued to protest against funding cuts for schools, seniors and the arts, Mr. Hansen said he intends to bring in a budget stripped down to the bare essentials.

“This is a budget that really builds a foundation for economic recovery,” he told reporters in Victoria. And while he is forecasting deficit budgets for the next four years, he suggested this year’s will be as bad as it gets.

“It’s based on the assumption that we are at the bottom of an economic cycle and that we are going to see economic growth from here forward.”

The finance minister will be armed with the latest quarterly update of revenues and expenditures and a fresh round of forecasts from a dozen private-sector economists.

Mr. Hansen didn’t rule out new tax cuts in today’s budget, but a controversial new tax hike will likely leave the biggest imprint.

Although the new harmonized sales tax doesn’t take effect until next July, Mr. Hansen will reveal today if he’ll collect the entire $1.6-billion transfer bonus from Ottawa this year – or spread it out over the next four years, giving him more breathing room as the next provincial election rolls around.

On Monday, the NDP focused on cataloguing funding cuts to arts organizations and seniors’ support, and a belated cut to school maintenance grants that wasn’t announced until most of the work had been contracted.

Doug Donaldson, the NDP MLA from Stikine, said the timing of the cuts has left community organizations in the lurch.

He pointed to the Bulkley Fall Fair, which was under way in Smithers last weekend when organizers were told their $20,000 grant was cancelled.

Kevin Kruger, minister for Tourism, Culture and the Arts, said the cuts reflect the government’s priorities.

“Would any member on the opposite side of the House argue that a program to fund nutritional and similar programs in schools for underprivileged children is a lower priority than fall fairs? Not everyone can be funded. Tough decisions have to be made.”

One tough decision both parties in the Legislature avoided Monday is the cost-of-living allowance for MLAs that is due in April. Mr. Hansen said no rollbacks are planned. The formula, based on the consumer price index, resulted in a pay hike for MLAs of just over $2,000 last year, increasing the basic salary to $99,000 per year.

Opposition finance critic Bruce Ralston said his New Democratic Party caucus colleagues would support a pay freeze only if the Liberal government initiates one.

“I don’t need the [cost of living allowance],” Mr. Ralston told reporters. But he stressed that he wasn’t speaking for his caucus.

However, Mr. Hansen noted that, under the terms of the government’s balanced budget law, the deficit means that the salaries of cabinet members will be reduced by 10 per cent.

[Globe and Mail]