Increased tax revenues and steady economic growth have tripled the size of B.C.’s budget forecast for 2018-19, as changes made by the NDP government begin to show their effects on the province’s books.
Finance Minister Carole James released the first quarter financial results for the province Friday, projecting a surplus that has jumped to $669 million for the fiscal year ending next March.
The red-hot urban B.C. real estate market is “moderating,” resulting in declining revenue to the province, James said. The revenue fell by $53 million during the first quarter, from April through June, resulting in a projected drop of $250 million for the entire year.
Housing market starting to moderate, BC surplus forecast up to $669M despite declining property tax revenues say @carolejames #bcpoli pic.twitter.com/A9Fqfj4PGI
— Tom Fletcher (@tomfletcherbc) September 7, 2018
That was more than made up by a projected increase of more than $1 billion in income tax revenue. Natural resource revenue is also projected to be up $495 million, mainly due to record high lumber prices.
Projected expenses are also up more than $1 billion, led by forest fire costs now estimated to be $477 for the current year. Emergency efforts for flooding also rose $162 million compared to the forecasts in the February budget.
James said the province’s employment picture continues to be the strongest in the country, helping drive the increase in income tax revenue. The threat is that people can get jobs but can’t find a place to live.
“If we don’t have affordable housing, people won’t stay in the province,” James said.
B.C. Liberal leader Andrew Wilkinson said the first quarter results are looking backward, and looking forward things are not so good.
“The NDP inherited a $2.7 billion surplus and the strongest economy in Canada, and now they’re projecting a slowing of growth, a 20 per cent drop in housing starts, which is a formula for widespread unemployment,” Wilkinson said. “And since they took office, the only job growth has been in government, with 10,000 new public sector jobs, and in the meantime 25,000 people in the private sector have lost their jobs.”
Another worry is trade, with the U.S. government threatening to pull out of the North American Free Trade Agreement and uncertainty continuing over lumber and other exports to the U.S.
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One of the NDP government’s measures that has not yet shown up on the books is the introduction of an employers’ health tax on public and private payrolls over $500,000.
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James reiterated that municipalities will not be getting a break on the new tax, which comes on top of reduced employee Medical Services Plan fees for 2019, before MSP premiums are phased out.
“Yes, they have a challenge in 2019, but we believe the benefit … of eliminating medical services premiums far outweigh the one-year challenge that they face,” James said.
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