B.C. Finance Minister Carole James today delivered the New Democratic Government’s third balanced budget in Victoria. It once again focuses on this government’s three core priorities: making life more affordable, delivering the services British Columbians depend on, and building a sustainable economy.
New spending was minimal as the Finance Minister focused on programs and spending commitments announced in previous budgets. She warned of challenging economic conditions ahead as the motivation for limited new spending. This prudence was reflected in the fact that 13 of 20 government Ministries will see their budgets frozen or reduced next year.
New taxes were added, including a new tax bracket on top income earners, a new tax on sweetened carbonated beverages and a new tax on “foreign sellers of software and telecommunication services” like Netflix, as well as sellers of vaping products.
Budget 2020 laid out the government’s capital spending plan for hospitals, schools and transit will be over within the next three years, bringing it to $22.9B – the highest in B.C.’s history.
Minister James said the financial losses at ICBC are almost over. Budget 2020 outlined a loss of only $91M this fiscal year, following $2B over the past three years.
Budget 2020 estimates B.C.’s real GDP growth of 1.8 per cent which remains slightly higher than the forecast of 1.7 per cent in the first quarterly report. An average of six private-sector forecasters expect B.C.’s economic growth to continue to be among the top provincial rankings in 2020 and 2021.
The higher-than-normal forecasting is projected due to continued growth in the housing market and higher-than-normal consumer spending. The economic forecast does assume a decline in exports through the year.
Revenues, Expenses and Debt
The 2020 budget projects razor-thin surpluses of $227M, $179M, and $374M in each of the next three years. However, additional forecast allowances of $300M in each of those years, contingencies of $600M in 2020/21, $400M per year in 2021/22 and 2022/23 to add additional layers of funding as a hedge against fiscal volatility.
Total taxpayer-supported debt is projected to increase by $14B, reaching $58.6B by 2022/23. The taxpayer-supported debt-to-GDP ratio is forecast to be 17.1 per cent, remaining in a reasonable range over the fiscal plan period at below 95 per cent.
New Taxes on Highest Income Earners, Soft Drinks and Netflix
Effective immediately, British Columbians earning over $220,000 per year will see their tax rate increase from 16.8 per cent to 20.5 per cent. This new tax will impact between 45,000 and 50,000 people and will result in an additional $216M in this fiscal year. The Finance Minister argued that even with this tax increase, B.C. will still have the third-lowest income taxes across provinces for individuals earning over $475,000. “We’re asking those at the top, who benefit the most from our economy, to contribute a little bit more,” said Finance Minister Carole James.
Budget 2020 also announced an end to the PST exemption for sweetened carbonated beverages, effective July of this year. Adding the seven per cent PST to these beverages will generate more than $30M per year.
Effective July 1st of this year, all Canadian and foreign sellers of software and telecommunication services (such as Netflix) will be required to start collecting provincial tax if revenues exceed $10,000.
Housing affordability remains a key part of Budget 2020 as the government plans to spend an additional $118M in operating funding and $56M in capital funding over the three-year fiscal plan to help support B.C.’s housing strategy. By 2022/23 B.C.’s overall operating budget for housing will rise to $1.2B.
Budget 2020 also provides $45M in 2022/23 to support B.C.’s housing strategy to assist through partnerships with all levels of government to improve market supply and help provide more housing options for B.C. residents.
An additional $50M over three years will be allocated towards expanded programs and services to support individuals without a home or at risk of homelessness. Further, Budget 2020 will provide an additional $56M in capital funding in 2020/21 towards the development of 200 new units of supportive modular housing for people who are homeless or at risk of being homeless.
Benefits for Children and Families
Budget 2020 will see an update to B.C.’s current early childhood benefit. Starting October 2020, the B.C. Child Opportunity Benefit will provide monthly tax-free support to parents. This new supplement will now support children up to the age of 18, where the previous supplement ended when a child turned six. This benefit will see families with one child receive up to $1,600 per year, families with two children receive up to $2,600 per year and families with three or more children receive up to $3,400 per year.
Affordable childcare also remains a focus with total investments over three years projected to reach $2B. The focus of these funds is on creating additional childcare spaces, building out the current workforce and updating aging facilities.
Increased resources for health care are a priority, as demonstrated by over $1B in new funding over the three-year fiscal plan. These investments are focused on providing better and quicker access to the day-to-day health services people rely on, including new urgent primary care centers across the province and access to diagnostic services close to home.
Total capital expenditures in the health sector are forecasted to reach $6.4B over the next three years. These investments will help support new major capital projects as well as upgrading current facilities, new diagnostic equipment and technology services across the province.
To help with the rising cost of the health care system, Budget 2020 will see an expansion to the current PST for sweetened beverages to seven per cent. This change comes following an all-party committee recommending this change to help with impacts to the health care system as a result from the consumption of these beverages. This is not the first time this idea has been presented to the Minister; it was brought forward in 2018 and immediately shot down by the government. Some believe this was acted on due to the tight fiscal pressures currently experienced by the government.
This budget provides more than $20B over three years to focus on schools and classrooms. Included in this is $339M in new funding to support students in K-12. This will mean over 10,000 new spaces for students all across B.C., more teachers, reducing classroom sizes, and adding new teachers. An additional $24M over three years is also being added in Budget 2020 to create the new B.C. Access Grant – this will replace existing grants for students entering post-secondary institutions and will result in an additional 40,000 students having access to these grants. As part of this change, students at universities and colleges around the province will have immediate access to financial support.
Climate Action and CleanBC
As part of B.C.’s continued focus on climate action, Budget 2020 will see new funding of $419M over three years to continue to build upon environmental initiatives currently underway. Focused areas include: $35M to support clean transportation, including B.C.’s Go Electric program; $106M to support building efficiency in public schools/universities; a further $155M for CleanBC to focus on industry; $120M to continue climate action credits ;and $3M to support B.C.’s Climate Preparedness and Adaption Strategy. This brings B.C.’s total investment in CleanBC to $1.3B to date.
Working with Indigenous Peoples
Budget 2020 continues to build on government’s ongoing commitments to help carve a path to reconciliation with Indigenous peoples. Budget 2020 continues the commitment to share gaming revenue with First Nations around the province, estimated to be $3B over 25 years. Additionally, Budget 2020 meets the commitment of revenue sharing, projected to be $96M in 2021/22 and $98M in 2022/23 towards helping First Nations communities fund local priorities.
As part of Budget 2020, the government earmarked $13M to support economic development and revitalization in the forestry sector. Additionally, as part of this budget, the government put an additional $195M in additional funding for fire and emergency management. This brings the total funding to $519M over three years to help respond to the ongoing crisis in B.C.’s forestry sector.
Budget 2020 sees infrastructure spending allocations at $22.9B over the three year fiscal plan period. This includes new schools, roads, housing, and hospitals across B.C. The budget has laid out capital spending for the next five years, with expenditures expected to be $9.2B. Budget 2020 includes funding for the George Massey Tunnel replacement project, as well as immediate funding for safety improvements on the existing tunnel. There is also $1.2B earmarked for the Patullo Bridge replacement over the next five years, $1.5B for SkyTrain extension on the Millennium line from Broadway to Arbutus, and $1.2B to complete the four lane extension of Highway 1 to the Alberta Border.
Upgrades to health facilities include investment in acute care beds as well as mental health care beds. The budget includes funding for previously-announced expansions and construction at health care facilities in New Westminster; Burnaby; Fort St. James; Kamloops; Penticton; Terrace; Vancouver and Williams Lake.