B.C. government surplus grows even with property transfer tax revenues going down

British Columbia’s financial books are rosier than expected after the first three months of the fiscal year.

Finance Minister Carole James presented the quarterly update on Friday that showed the province is now looking at a $669 million surplus, which is $450 million higher than projected in Budget 2018.

This increase is mostly due to better than expected revenues based on updated 2017 tax assessment information. The budget surplus is less reliant upon property transfer taxes than previous B.C. budgets have been.

“I am always cautious. But I am feeling positive with the Q1 results. It shows the housing market is moderating but shows strong growth,” said James.

“The change really is to restore stability to the housing market, while continuing to strengthen the long term fiscal health of British Columbia.”

Property transfer tax revenues to the government are down $250 million. Greater Vancouver has seen housing sales drop hitting its lowest level since the year 2000, according to data from the Real Estate Board of Greater Vancouver.

According to the real estate board, there were 2,070 property sales in total in July, down 30.1 per cent from July 2017, down 14.6 per cent from June of this year, and nearly 30 per cent below the 10-year average for the month of July.

James pointed to the province’s strong bottom line as proof that B.C. can still have strong economic numbers without an out of control housing market.

“That is why we brought in a housing plan. To show how we could moderate the market and provide that economic strength for British Columbia. Not just look at the property transfer tax for a marker of a strong economy,” said James.

The provincial government has also spent more than $400 million this fiscal year on fighting fires. The government’s books were also hit hard during flood season.

James is in the midst of planning for the 2019-20 budget now and said that the province needs to reconsider how it allocates budgets for fires.

Currently, the province averages out the cost of fighting fires over the past ten years. But the province has had its two worst fire seasons in B.C.’s history in the last two years.

“I think we are going to look at that reality and we are going to have look at the prevention work that goes on,”said James.

“As I mentioned we put $50 million in the budget last year to be able to deal with prevention to help communities prepare but I think it will be part of the discussion as well.”

The BC Liberals say the picture is not as rosy as the NDP wants the public to believe. Finance critic Shirley Bond says she is concerned about reduced economic activity and rising interest rates.

“In particular, the report shows housing sales are down at least 15.9 per cent and housing starts have slowed and are projected to plummet almost 20 per cent in 2019. Since the NDP and Green Party formed their Confidence and Supply Agreement in June 2017, B.C. has lost more than 25,000 private sector jobs,” said Bond.

“Month over month labour force statistics released today show that they have remained flat. It’s easy to balance budgets if governments have no concern about increasing taxes, and it is clear this government thinks British Columbians are a piggy bank they can go to time and time again to finance massive increases in public spending.”