B.C. Minister of Finance Brenda Bailey tables the provincial budget as Premier David Eby, right, looks on, at the legislature in Victoria on Tuesday.CHAD HIPOLITO/The Canadian Press
British Columbia has introduced its 2026-27 budget with a record-breaking deficit, despite raising taxes and pledging a reduction in the public-sector work force.
Here are the budget highlights:
Deficits
This year’s deficit is expected to rise to $13.3-billion, a provincial record. It’s an increase of $3.7-billion over the year before, which itself was a record. The deficit is expected to decline to $12.2-billion for 2027-28 and then to $11.4-billion the year following.
Debt
Tax-supported debt will increase to $142.5-billion by the end of next year. Since the NDP government was elected in 2017, tax-supported debt has skyrocketed. By the end of next year, it will have almost doubled since 2023-24.
Paying interest on British Columbia’s debt will cost $6.4-billion next year. By comparison, the province spends $10.8-billion on social services.
The government maintains its debt is affordable and notes its taxpayer-supported debt-to-GDP ratio remains lower than that of most provinces, including Quebec and Ontario.
Economic growth
The budget is based on economic growth projections of 1.3 per cent in 2026 and 1.8 per cent in 2027. That’s slightly lower than the province’s economic forecast council – made up of economists from Canada’s major financial institutions – had predicted. The council estimates economic growth last year was 1.5 per cent.
Tax increases
The province is raising income taxes by implementing an increase of 0.6 per cent across the board on the first $50,000 of taxable income. The province notes the increase will amount to about $76 more in income taxes for the average taxpayer in 2026.
A low-income family of four with a net income of $30,000 will see a dramatic drop in the tax credits they will receive. For next year, they can expect a net tax credit of $1,623, but in 2025, that figure was $2,411. The difference is owing to the province’s move to cancel the carbon tax, which disproportionately paid a benefit to lower-income households. As well, a B.C. family benefit program introduced in 2023 will end.
A family with a net income of $100,000 will pay $4,601 in net provincial taxes, compared with $4,058 last year. Government figures show that is dramatically less than in 2016, when that net tax burden was $7,473.
The province is increasing the tax on residential properties above $3-million, including a jump to 0.6 per cent from 0.4 per cent for properties above $4-million. The vacancy tax rate for foreign owners will rise to 4 per cent from 3 per cent.
Public service
The budget document notes that over the past 10 years, public-sector job growth has increased by over 40 per cent, including more than 80,000 full-time equivalent positions since 2020. “This has significantly outpaced economic growth,” the document notes.
The B.C. government pledges to cut 15,000 of those positions over the three years of the economic plan, mostly through attrition and possibly by offering incentives for public servants to leave their jobs. The figure represents a 3.4-per-cent reduction in the work force.
The savings represent $625-million in the first year. However, not factored into the budget are the continuing labour negotiations with public-sector employees. Despite declaring last year a goal of keeping public-sector pay increases to 3.5 per cent over two years, the government has reached agreements with several public-sector unions amounting to 3 per cent a year over four years. That will cost about $1.2-billion once the entire public sector is offered the same increases.
In other words, the money saved by eliminating positions will be outspent by the increases in public-sector wage increases.
Capital projects
The government has “re-paced” – halted – some capital projects, such as Phase 2 of the Burnaby Hospital and a student housing project at the University of Victoria. In total, “adjusting the pace” of some housing investments will reallocate some $1.4-billion in the budget. Finance Minister Brenda Bailey was emphatic that the projects have not been cancelled.
Health and education
Ms. Bailey maintains her government has reached a balance in this budget by protecting public services like health and education while driving down the deficit eventually.
However, the province has set itself some highly ambitious targets. The government expects to keep health spending to an increase of only 4 per cent. That is lower than in any other year in the past seven. In education, spending growth will be capped at 1.8 per cent in the coming year, which is the lowest level since 2020-21, when it was 1.4 per cent.