UPDATED A larger-than-expected provincial surplus and tight spending control were just two highlights of the BC budget unveiled on Tuesday, February 17.
BC finance minister Mike de Jong presented the province’s 2015/16 budget, the third consecutive touted as balanced from the BC Liberal Party, to members of the provincial legislature. It brings tax relief for some of the province’s poorest families, but offers little in the way of benefits to offset government increases most middle-class families will face this year.
The budget helped a small percentage of people at both ends of the socio-economic scale, but “for everyone else it’s really about being getting nickel-and-dimed on fees and service charges,” Hamish Telford, head of the political science department at University of Fraser Valley, said. He explained the term service charge is just another word for tax.
He was surprised by the size of the surplus, however. “It’s unfortunate that they didn’t decide to do more with the surplus,” he added.
Telford said that if the health of the provincial economy was so robust, he was surprised that the government did not do more, “in terms of restoring public programs or services which have suffered under the restraint of the last few years.”
De Jong reported BC’s forecasted surplus has increased from last fall’s $440 million to $879 million due to unexpected increases in income tax, the sale of government assets and the delayed opening of the Evergreen Skytrain line. The finance minister added that the surplus would be used to pay down the province’s $63-billion debt.
The finance minister emphasized the province’s conservative spending and diversified economy as key factors in making British Columbia one of the only provinces in the country to put forward a balanced budget this year so far.
Parents on income or disability assistance who also receive child support payments will no longer have the amount of those support payments reduced from their government support starting next September, a move expected to help more than 3,000 of the province’s poorest families.
Few tax breaks for the province’s middle-class families, other than those which had previously been announced, were included in this year’s budget. A $1,200 grant is being offered to parents who have a registered education savings plan for a child born after January 1, 2007.
BC’s highest earners will receive a tax cut as the personal income tax bracket of 16.8 per cent for individuals earning more than $150,000 will be eliminated January 1, 2016 as previously promised. That temporary tax bracket, which affected about two per cent of British Columbians, was created two years ago to help shore up government tax revenue during the economic downturn. Those high earners will fall into the province’s highest bracket of 14.7 per cent for those earning $105,592 or more.
Spending in the provincial government’s two largest financial obligations, health and education, saw modest increases. Health care funding will be boosted by three per cent, nearly $3 billion, over the next three years. The provincial government will spend $17.4 billion on health in this budget.
Medical Services Plan premiums for individuals and families will again increase this April four per cent.
In education, an additional $564 million will be added to the Learning Improvement Fund over the next three years to meet the terms of the recently agreed to collective agreement signed with British Columbia Teachers’ Federation. School districts around the province will have less money for administration of kindergarten to grade 12 as the government plans to trim $54 million over the next two years—$29 million in 2015/16 and a further $25 million in 2016/17.
Powell River Board of Education chair Jeanette Scott said in her opening remarks at February’s public school board meeting, February 17, that the budget continues the trend of education opportunities being negatively impacted by lack of adequate funding.
“And there does not seem to be any significant changes in the foreseeable future,” said Scott, who wonders how the province’s public education system is to remain “a leading jurisdiction on the international stage” with this funding trend.
The Liberal Party has always described itself as a mixture of liberal and conservative ideology, Telford said who characterized de Jong as one of the party’s most conservative finance ministers in the past 15 years. He added that this budget reflects the conservative priorities of shrinking government and paying down debt.
On the question of debt, Telford agrees the government is right to limit bad debt, debt built up due to operating deficits, but that should not stop it from borrowing for infrastructure development which can help improve the provincial economy.
“People get very alarmed by the absolute size of that debt as it keeps increasing,” he said, but the “important measure of that debt is in relation to the size of the economy.”
Telford explained that the relative provincial debt, the debt to GDP (gross domestic product) ratio, is quite low compared to other jurisdictions.
“A debt to GDP ratio of 20 per cent is nothing to worry about,” He said. “That’s why the province touts its triple-A credit rating.”
The political scientist added that some economists are saying that with low interest rates, now might be a good time to take on debt for capital projects to further improve the productivity of the provincial economy.
Perhaps more was not done to restore programs because the government was only at the mid-point of its term, he said. A priority may be to save money for “political goodies closer to the election.”
