What a difference four years makes.
Finance Minister Mike De Jong is about to unveil his fifth consecutive balanced budget, and, as is usually the case in the run-up to an election, it’s expected to be packed with goodies.
But while last time around, back in 2013 when newly-minted BC Liberal leader Christy Clark was seeking her first election win, the government was playing with a razor-thin surplus of $197-million, this year it is packing more than $2.2-billion in government coffers, meaning the bounty could be of a different order of magnitude.
So how might the 2017 pre-election budget compare to its 2013 counterpart, and what will voters see?
While raising taxes heading into an election may seem counter-intuitive, that was exactly the case in 2013 as the Liberals delivered their first of what’s expected to be five consecutive balanced budgets.
Budget 2013 saw the BC Liberals raise taxes by $327-million, including a one-percent increase in the corporate rate, and a two-year two per cent increase in personal income taxes for those earning more than $150,000.
Taxes on cigarettes also went up by $2 a carton, along with a four per cent MSP hike, and the end of a school property tax credit for light industry.
READ MORE: Housing, MSP key items in Budget 2016
The carbon tax remained neutral, and the government provided additional carbon tax credits and exemptions for farmers.
Don’t expect to see tax hikes this time around, with the BC Liberals strongly signalling money will flow in the other direction, saying as much in last week’s throne speech:
“The government is now in a position to pay you back. To relieve some financial burdens and to invest in your household and in your families.”
What remains unknown is whether that cash back will come in the form of a straight-up tax break or relief on fees for services like insurance and electricity.
One high-profile possibility being floated is a reduction in PST, with a one-point drop costing the treasury about one billion dollars. An income tax tweak is also possible, though changes to the carbon tax are unlikely owing to the province’s carbon-price commitment to the federal government.
Alternately (or additionally) the government could slash fees. After years of increases, the government already scrapped this year’s planned four per cent MSP hike and may alter the formula for premium assistance again as it did last year, raising the threshold for those who qualify.
ICBC rates, which have climbed nearly 30 per cent since 2012, and Hydro rates, which are mid-way through a 26 per cent climb as a part of the crown corporation’s 10-year rate plan, could also be tempting targets.
With a surplus of under $200-million, the 2013 election budget was reasonably lean on program spending.
In an effort to balance the budget, the BC Liberals held annual spending to 1.5 per cent over three years, maintained both a hiring and management salary freeze, and shaved about $1-billion from various ministries and crown agencies’ budgets.
On the other hand, that made room for program spending, much of it family-focused; that theme was later reflected in the Liberals 2013 “families first” campaign focus.
Budget 2013 introduced the Training and Education Savings grant, a $1,200 RESP contribution to parents for the future education of each new child.
It also introduced a $55/mo child tax benefit for low-income families and poured $76-million into new childcare spaces.
READ MORE: 12 highlights of the 2015 BC Budget
Smaller funding hikes were also kicked to the RCMP, sports programs, gambling treatment, and DTES SROs.
By comparison, 2017, has already seen British Columbians awash in a deluge of spending announcements with the budget yet to drop.
February alone has seen hundreds of millions of dollars doled out for schools, highway improvements, tree planting, overdose prevention, court houses, disability assistance, and the homeless.
And with $2.2-billion in the bank, it’s a safe bet this week’s budget will contain more goodies as well as core program funding.
Guaranteed to see a boost will be B.C.’s public schools, with the province on the hook for an estimated up to $300-million after losing a Supreme Court of Canada case to teachers over class size and composition.
The Ministry of Children and Family Development is another likely candidate for a spending hike in the wake of a string of high-profile in-care youth deaths and series of damning reports on flaws in the system.
Additional money to combat the opioid overdose epidemic or new measures to deal with housing affordability could also crop up in the budget.
Surplus and Debt
Underlying the tax decisions and spending priorities, of course, are the hard numbers.
Budget 2013 saw the BC Liberals return the province to the black, though by a narrow margin.
That effort was made possible in part by the selling off of nearly $800-million in government assets.
Other big revenue line items included $282-million from natural gas, $2.7-billion from natural resources, $2.15-billion from MSP, a combined $800-million from ICBC and BC Hydro, and $725-million from the property transfer tax.
The government of 2013 assessed a total provincial debt of $63-billion, predicting a rise to $69-billion by 2015/2016 with plenty of spending on capital projects.
It also predicted the taxpayer debt to GDP ratio would climb to 18.3 percent before dropping to 18.1 percent.
B.C. will be in the black again for the fifth time this year, and this time the margin is much, much larger.
We won’t know the full breakdown until we see the fine print, but a look at November’s Second Quarterly Report from the Ministry of Finance could provide some guidance.
That document shows a surplus of $2.24-billion – essentially driven by B.C.’s real estate boom.
Property transfer tax alone was forecast to rake in $2-billion, while natural resources had shrunk to $2.6-billion, MSP grew to $2.5-billion, and the line item for ICBC shows cash flowing the in the opposite direction to the tune of $79-million.
It also pegs the total provincial debt as having grown to $65.8-billion – an increase, though less than predicted in 2013, and shows the government’s key metric of taxpayer debt to GDP having fallen to 15.8 per cent.
How those trends hold up will be revealed when we get a look at the latest numbers.