The B.C. government is expecting $6.3 billion less in revenue due to the COVID-19 pandemic and an operating deficit of $12.5 billion for the 2020-21 budget.
In a fiscal update Tuesday, B.C. Finance Minister Carole James said the COVID-19 pandemic will result in "the worst downturn experienced in our province in recent history."
"The projected numbers are staggering, but they're not without hope," James said, in summing up B.C.'s fiscal position.
She said B.C. had entered the pandemic perhaps better situated than other provinces, as it had a balanced budget, a triple AAA credit rating and one of the lowest unemployment rates in the country.
B.C. also managed to contain the pandemic and flatten its growth curve better than some other provinces, and it has been able to move earlier on a phased economic restart plan.
"Because of that strength, we were able to take immediate action to help people, to help businesses, to help communities with our $5 billion COVID action plan," James said.
She said the province is expecting a loss of $4.2 billion in tax revenue, including $1 billion less in personal income tax revenue, $973 million less in corporate taxes, $1.3 billion in provincial sales tax revenue, $300 million in natural resource revenues and $882 million less in Crown Corporation income.
The province is also spending $5 billion in emergency spending, and has approved $1.3 billion in tax credits and deferrals. In total, the increased spending, lost tax revenue and foregone revenue will bring the deficit to $12.5 billion.
In February, James brought down, but never passed, a balanced budget and modest surplus of $227 million and provincial GDP growth projections of 2% in 2020.
"Mere weeks after the budget 2020 was tabled, our entire world changed," James said.
James said the B.C. economy is now expected to contract 6.8% in 2020, according to some forecasters.
Since February, B.C. lost 235,000 jobs, and saw retail sales declined by 23.6% in April compared to February. Overall, home prices dropped 4%.
Home sales declined 45.4% in May, compared to February, and B.C. merchandise exports are down 14.7% year-to-date, compared to January to May 2019.
"While the job losses in March and April were record-breaking, figures for May and June in fact have seen some recovery of the losses that we experienced in the previous two months," James said.
Asked if her government planned to resort to spending cuts to address the deficit, James said "now is not the time to be able to cut back on services and support for people and business in British Columbia."
As for any long-range plans for dealing with debt and deficits, James said: "I do not believe that it's going to be a quick fix."
Asked if the $5 billion that her government has already approved could be added to later this year, James said "I believe the $5 billion is enough now."
However, she added no one can predict what might happen should there be a second wave of COVID-19.
As for the $22 billion in capital spending allocated in the 2020 budget over three years for big capital works projects, like new schools, hospitals, bridges and roads, that will continue to be spent.
"This is going to serve us very well because it translates into huge investments," James said.