B.C. Minister of Finance Brenda Bailey tables the provincial budget as Premier David Eby, right, looks on in the assembly at the legislature in Victoria, on Tuesday.CHAD HIPOLITO/The Canadian Press
British Columbia’s finances are in dire shape, with the deficit and debt soaring. Tax hikes are sprinkled throughout the budget released on Tuesday. And the NDP government of David Eby, which loves to tout its “investments,” is slowing down spending on capital projects.
That, unfortunately, may be the good news or, if you prefer, the least-bad news. Because there is a fiscal time-bomb buried in the depths of the budget, that is ticking away and is likely to blow up the carefully constructed artifice of the B.C. budget.
To believe B.C. Finance Minister Brenda Bailey, her province is the innocent victim of global instability, which is eating away at the province’s revenues. “We must assume this pressure on our revenue is the new normal and operate accordingly,” Ms. Bailey said in her budget speech.
Global turmoil is a reality, but Ms. Bailey’s framing ranges beyond disingenuity into outright fiction. British Columbia does not have a revenue problem. The first budget of the Eby government projected that the province would take in $82.2-billion in the current fiscal year. This year’s budget projects revenue of $85.1-billion for fiscal 2026, an increase of $2.9-billion.
B.C. to raise taxes, cut jobs as budget projects record deficit
Meanwhile the government blew past its own estimates for operating expenses, piling on an additional $9.9-billion in spending for the current fiscal year. Whatever pressure the government is feeling comes from its deeply ingrained habit of irresponsible spending.
There is a similar ...disconnect... between Ms. Bailey’s rhetoric and reality when it comes to the provincial deficit. “When it comes to our fiscal position, Budget 2026 reduces the deficit, carefully and thoughtfully over time,” she said Tuesday.
That is a breathtaking misstatement on the part of the minister. In fact, the government predicts that the deficit will increase to $13.3-billion next year from this year’s forecast of $9.6-billion, and then decline marginally to $12.2-billion in fiscal 2028 and $11.4-billion in fiscal 2029. The deficit will be higher in every year of the forecast than the current fiscal year: not a reduction, not careful and certainly not thoughtful. Reckless is the word that springs to mind instead.
As bad as that outlook seems, the reality is likely to turn out to be far worse. That is because Ms. Bailey’s budget is built on an all-too convenient fiction that ignores the government’s current fiscal situation and past performance.
Brenda Bailey has delivered a budget that raises the base income tax rate but fails to rein in the deficit, which is predicted to hit $13.3-billion next fiscal year. The finance minister says the budget protects critical services, including health care and education, while taking action to cut spending and boost revenue.
The Canadian Press
If the NDP is to be believed – and it should not be – health care spending will rise 4 per cent in fiscal 2027, 1.5 per cent in 2028 and 4 per cent in 2029. Similarly, education spending is to rise 1.8., 1.1 and 2.1 per cent in fiscal 2027, 2028 and 2029.
Those projections defy reality, and lack any credibility. Health care spending will barely keep pace with inflation, never mind population growth or the demographic pressures of a growing cohort of elderly patients. Education spending won’t even keep up with inflation.
Then there is the government’s contract settlements with public sector workers, with wage increases hovering around 3 per cent a year. Those facts alone undermine the credibility of the NDP’s budget.
But recent history drives home the point. The Eby government’s first budget, three years ago, made similarly starry-eyed projections for health care and education spending. Health care expenses were projected to rise 10.6 per cent in fiscal 2024, 3.9 per cent in 2025 and 2.6 per cent in 2026.
Seven highlights from B.C.’s budget, including a rising deficit and tax increases
The Eby government missed those targets by huge margins. Spending on health care rose by 15 per cent, then 25.9 per cent and then 11.9 per cent. Rather than the projected three-year increase of 17.9 per cent, health care spending surged by 62 per cent. The numbers are similar for education, if somewhat less dramatic.
Simply put, the NDP has already proven its projections are worthless. B.C. residents should get ready for more red ink, and more tax hikes once those forecasts implode.
The Eby government is clearly counting on voters not noticing, or not caring, that it is endangering B.C.’s fiscal stability. Younger voters, who have at best faint memories of the painful fiscal retrenchment of provincial finances a quarter-century ago, may well be indifferent, for the moment.
But given the trajectory of this week’s budget, they will get their chance soon enough to live through their very own fiscal hangover, after a discredited NDP finally hands over the keys to a much weakened province.