B.C. slashes deficit projection to $4.8 billion

Municipal Affairs and Housing Minister Selina Robinson listens during a housing announcement in Coquitlam, B.C., on Friday April 13, 2018. (THE CANADIAN PRESS/Darryl Dyck)

B.C. Finance Minister Selina Robinson has revised the province's deficit projection to $4.8 billion, down from an initial forecast of $9.7 billion, citing higher-than-expected revenues.

The minister cited higher-than-expected revenues from personal and corporate income taxes, natural resources and federal funding for the improved outlook.

In a first quarterly update, which shows revenues and expenses from April to June 2021, Robinson added higher retail sales, exports and housing have helped the economy rebound at a faster rate than expected just five months ago when the budget was tabled.

Still, she noted the recovery has been uneven. Some businesses are reporting difficulty in attracting and keeping workers, spending on services such as travel and recreation are down and there are lingering impacts to youth, women and people of colour who were disproportionately affected by the COVID-19 pandemic.

As of August, the province’s unemployment rate was 6.2 per cent, higher than pre-pandemic levels, but lower than the national average of 7.1 per cent.

Retail sales were 13 per cent higher than pre-pandemic levels, with spending on autos and parts, building supplies and gardening both up by more than 35 per cent.

Workers looking for more space for a home office also propelled spending on housing. The projection for property transfer tax revenue this year is now $360 million higher. To the end of June the province had collected nearly a billion dollars. While Robinson said housing activity has slowed in recent months, it’s still at near record levels and house prices are also continuing an upward trajectory.

The province notes significant risks to the budget primarily from the ongoing pandemic. While $3.25 billion has been allocated as of June 30, $317m were out the door. There’s still more than $600m left to deal with any other impacts.

- with files from CTV -