Spending and revenues related to the COVID-19 pandemic have resulted in a projected $12.8 billion provincial deficit next year, said BC officials.
BC forecasts $12.8 billion deficit next year
Published 11:51 PDT, Thu September 10, 2020
The provincial government is forecasting a $12.8 billion deficit for the 2020-21 fiscal year.
The COVID-19 pandemic has profoundly impacted provincial revenues and government spending on supports for people and businesses. But the deficit is on track with the province’s July fiscal and economic scenario.
“The pandemic has threatened lives and livelihoods, and our government responded with one of the most supportive, comprehensive action plans in the country,” said Finance Minister Carole James. “Since the province’s July fiscal and economic scenario, we have seen stronger than expected consumer spending, housing activity and employment gains. These gains are offset by increased prudence to help BC weather the long road ahead.”
BC’s first quarterly report confirms revenue declines in taxation, natural resources and other sources that were anticipated in July. However, the overall impacts on revenues and expenses are lower, with a $5.7-billion decline from Budget 2020, compared to a $6.3-billion decline shown in the July scenario. Improvements from July’s update include better than expected employment gains, retail sales and housing activity, resulting in revenue gains in provincial sales tax, personal income tax and property transfer tax.
The updated deficit forecast includes a $1-billion forecast allowance as part of government’s commitment to economic prudence in response to the heightened uncertainty brought by COVID-19.
The first quarterly report also includes a summary of COVID-19 investments to date, with details of the $7.6 billion in COVID-19 response measures that have supported people and businesses since the beginning of the fiscal year.
The COVID-19 action plan has included supports such as workers benefits, rent supplements, income and disability assistance supports, and economic recovery funding. Another $1.8 billion in temporary relief measures for people and businesses include supports such as the Climate Action Tax Credit, pandemic pay for front-line workers and the reduction of school tax for commercial properties.
As part of the COVID-19 action plan, $1.5 billion has been earmarked for economic recovery measures to be announced in September.
To read BC’s first quarterly report, click here.
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