The B.C. government has introduced legislation to get rid of the requirement for the province to put forward balanced budgets.
The amendments, if passed, will authorize deficit budgets for the next three years, while the province deals with the economic fallout from COVID-19. Currently, B.C. is not legally allowed to run deficits.
The amendments also clarify the existing limits while the legislative assembly is not in session to maintain essential services and respond to provincial emergencies and disasters like a pandemic.
“We are making sure people and business have the support they need, while we work together to restart and rebuild an economy that works for everyone,” Finance Minister Carole James said.
“Much has changed since we released Budget 2020, and deficits will occur as a result of lower government revenues and our plan to invest in people and support our province’s recovery.”
The B.C. government will provide a financial update on July 14 as the province grapples with the economic impact of the COVID-19 crisis.
The provincial budget tabled in February projected a surplus of $227 million in 2020-21, $179 million in 2021-22 and $374 million in 2022-23.
Those surpluses have been wiped out by the COVID-19 pandemic with no clear picture of how badly the province’s bottom line has been impacted.
The province has earmarked $5 billion for coronavirus relief, including $1.5 billion for economic recovery.
“Right now is the time to focus on supports for people and businesses,” James said.
“We feel three years is appropriate because it is a three year fiscal plan.”
The legislation also brings the B.C. Emergency Benefit for Workers into law and updates the eligibility date to March 1, 2020. The change will allow people whose income is affected by COVID-19 and who filed federal employment insurance claims between March 1 and March 15 to benefit from the support.
The application for these individuals will be available as of June 26, 2020. Almost 600,000 people have been approved to receive the benefit to date.
The Business Council of British Columbia (BCBC) issued its latest B.C. Economic Review and Outlook, which shows the province’s economy slipping into a deep recession.
The business council is now forecasting a 7.8 per cent contraction in the province’s 2020 gross domestic product.
This is down from the “better case” scenario from March, which projected a 7.3 per cent decline, but the business council no longer believes the 10-per-cent to 12-per-cent contraction that was postulated under a “worse case” scenario is likely.
The organization is also concerned about B.C.’s workforce numbers. Since February, the number of people working in the province has plummeted by approximately 350,000, with 95 per cent of lost jobs in the private sector.
Other highlights of the legislation
- All ministers will be taking a 10 per cent pay cut if the legislation is passed
- Filing and payment deferrals for employer health tax, provincial sales tax, hotel tax, carbon tax, motor fuel tax and tobacco tax to Sept. 30, 2020 now official
- Allowing municipalities to keep school taxes and the police tax collected for the Province until January 2021
- Requiring municipalities to remit taxes they collect for TransLink in July 2020 so it can continue operating, as well as allowing other municipalities to continue to make their service payments to BC Transit.