B.C.’s deficit is forecast to rise to a record $13.6 billion for the current year, with some signs of recovery offsetting another $2 billion round of COVID-19 spending debated in the legislature this week.
Finance Minister Selina Robinson released the province’s second quarter economic update Dec. 17, two months late as the government struggles to keep up with the demands of the coronavirus pandemic. It shows an increase in the forecast deficit, $850 million higher than the first quarter forecast. B.C.’s economy is now expected to shrink by 6.2 per cent for 2020, with a “partial recovery” forecast for 2021.
The cost of sending $1,000 in borrowed money to almost all B.C. households whether they lost income in the pandemic or not, an October election promise from Premier John Horgan, is offset by better-than-forecast income tax and property transfer tax revenue, as well as gains in net income for Crown corporations such as B.C. Hydro and ICBC.
Estimated cost of the payments has been revised upward, from $1.45 billion in the NDP election platform to $1.7 billion in the latest update. It pays $1,000 to families with 2019 income up to $125,000, and $500 for single individuals who made up to $67,500 last year. Reduced payments are to go to families earning up to $175,000 and individuals making up to $87,000 in 2019.
B.C.’s export revenues are down eight per cent so far this year, but the forecast for natural resource revenue has increased by $156 million, mainly due to increased prices for lumber and natural gas.
The biggest boost to forecast revenues is $479 million more in property transfer tax, driven by rising real estate prices and an active market in recent months. Commercial Crown net income is revised upward by $363 million from the first quarter.
“ICBC net income is up $324 million, mainly due to savings from lower claims costs, Liquor Distribution Branch net income is up $35 million, reflecting a shift in consumption to home purchases, and this is partly offset by weaker B.C. Lottery Corp. income due to temporary casino closures,” Robinson told reporters Dec. 17.