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Finance Minister Brenda Bailey and Premier David Eby at the legislature in Victoria in February, 2025.CHAD HIPOLITO/The Canadian Press
B.C. Finance Minister Brenda Bailey has promised to unveil a tough budget plan Tuesday, one that she predicts will make her immensely unpopular because of the difficult decisions the province has had to make.
The NDP government has delivered three deficits in a row, and the current fiscal year that ends in March is forecast to be $11.2-billion in the red. Ms. Bailey is set to produce another deficit this week, but the spotlight will be on whether she curbs the growth of B.C.’s shortfalls.
Under Premier David Eby, the deficit has climbed to record heights as he pushed his agenda to address ever-growing demands in health care and education. But the trade-exposed province is now navigating considerable uncertainty. The economic reality is expected to rein in Mr. Eby’s costly ambitions.
The government has indicated that its next budget will aim to protect core services, and to keep personal income-tax rates competitive for people earning under $150,000. Beyond that, the intent is to reduce the size of the deficit.
B.C. government lowers deficit projection to $11.2-billion
The head of the public service, Shannon Salter, set the tone in her latest internal memo to government employees where she bluntly described the deficit as unsustainable.
David Williams, vice-president of policy for the Business Council of B.C., said he’ll be looking for meaningful cuts to show that the government is serious about halting its fiscal slide. To date, the government’s months-long “efficiency review” has yielded little savings.
“Our finances are unraveling at a breathtaking speed,” he said. In 2021, he noted, the B.C. government had a triple-A credit rating. Since then, the province’s operating expenses have grown by about 35 per cent, while revenues have only grown by 18 per cent. The debt has more than doubled. B.C. now has an A-plus credit rating with a negative outlook, which is only one credit downgrade away from being on par with Prince Edward Island.
“So, the trajectory that we’re on is wholly unsustainable,” Mr. Williams said.
One of the measures he’s watching is the size of the public service, which has expanded faster than the private-sector work force. Not only have the number of public servants grown, but their wages are rising faster than inflation.
Members of the BC General Employees’ Union (BCGEU) approved a new contract last October, a four-year deal with 3-per-cent annual wage hikes for the core civil service.
Those increases were “over and above what will be made available to the rest of the public sector,” the provincial government said at the time. It insisted that everyone else would be kept to the more stringent bargaining mandate it had set for public-sector bargaining. Before entering into mediation with the BCGEU, the province offered total wage increases of 3.5 per cent over two years.
That’s proving to be wishful thinking. The Hospital Employees’ Union got the same package, and members of the BC Teachers’ Federation are preparing to vote on a tentative agreement that also mirrors the BCGEU deal. With that, it’s unlikely any public-sector union will settle for less.
Labour costs currently account for almost 60 per cent of the provincial budget and these wage increases will add substantial new pressure. A 3-per-cent increase across the entire public sector would add more than $1.5-billion to expenditures each year.
Paul Finch, president of the BCGEU, said in an interview that he is not expecting a restraint-era budget, but he does expect changes.
“The deficit of that magnitude is unsustainable. And the next question should be, what is the solution to narrow the gap between revenue and spending?”
He argues that the government’s main problem is on the revenue side, not the expenditure side. But he expects that there is room to cut spending – in the ranks of non-union workers such as contractors and management.
When Ms. Bailey spoke to the Vancouver Board of Trade in late January, she predicted that she is going to be “the least popular person in the province for a while” after she delivers her budget.
Mr. Finch predicted that the twist on Tuesday will be that her budget won’t be as tough as she implied.
“Her remarks concerned a lot of us about the projections of just how much this would be in an austerity budget. And I think the surprise will be that the actual budget is not going to be as extreme as was alluded to in that speech to the Board of Trade.”
