B.C. Budget Response
Contacts:
Michael Walker, Executive Director
The Fraser Institute, (604) 714-4545,
Email michaelw@fraserinstitute.caJoel Emes, Research Economist
The Fraser Institute, (604) 714-4546, Email joele@fraserinstitute.caRelease Date: 1 April 1999
Vancouver, BC>>> British Columbia's Budget '99 differentiates BC from the other provinces in Canada. Finance Minister Joy MacPhail's comment, "Unlike other provinces, we intend to grow our way out and not cut our way out" shows that the BC government has clearly given up on attaining a balanced budget or improving its fiscal performance.
The spending increase shown in the Consolidated Revenue Fund is small compared to what will actually be spent. The best measure of the increased spending is the change in total debt - this will increase by $3.6 billion between 1998/99 and 1999/00 - an unprecedented 11.4% increase (see figure 1). If this increase in debt had to be raised as tax revenue this year the impact on the average family of four would be a $2,387 increase in the total tax bill. The total tax bill would go from $33,763 to $36,150 - this would represent an increase in the tax rate from 48.5 to 51.9 percent of cash income.
Saskatchewan recently released their 1999 budget. It, along with the Fraser Institute's recently released Fiscal Performance Index, provides an interesting metric against which to assess BC's budget.
It is true that BC is acting unlike other provinces. BC has decided to use deficit financed spending to try and kick-start the economy - Saskatchewan eliminated its deficit in 1994/95 by cutting spending and its recent budget: increases health spending by $139.6 million; cuts the sales tax from 7 to 6 percent; and pays down $101 million in debt (see table 1). Saskatchewan ranked 4th out of 56 jurisdictions on the spending component of the Fiscal Performance Index (FPI) - BC ranked 42nd, the lowest score for any province. On the overall FPI BC beat out only Florida and Oregon. BC's fiscal performance relative to other North American jurisdictions has been worsening for years and BC's finance minister predicts it "…to get worse before it gets better."
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Table 1: Spending, Revenue, and Debt of British Columbia and Saskatchewan ($millions) |
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|
1995/96 |
1996/97 |
1997/98 |
1998/99 |
1999/00 |
|
|
Total Debt |
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|
BC |
30,182 |
31,579 |
35,172 |
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|
change |
1,397 |
3,593 |
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|
SK |
11,554 |
11,527 |
11,426 |
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|
change |
(27) |
(101) |
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|
|
|||||
|
BC |
20,055 |
20,464 |
20,369 |
20,768 |
21,045 |
|
change |
409 |
(96) |
400 |
277 |
|
|
SK |
5,113 |
5,096 |
5,131 |
5,589 |
5,570 |
|
change |
(17) |
35 |
457 |
(18) |
|
|
|
|||||
|
BC |
19,699 |
20,127 |
20,216 |
20,224 |
20,155 |
|
change |
428 |
89 |
8 |
(69) |
|
|
SK |
5,132 |
5,503 |
5,152 |
5,607 |
5,579 |
|
change |
371 |
(351) |
455 |
(28) |
|
|
|
|||||
|
BC |
(356) |
(337) |
(152) |
(544) |
(890) |
|
change |
(19) |
(185) |
392 |
346 |
|
|
SK |
18 |
407 |
35 |
18 |
8 |
|
change |
389 |
(372) |
(17) |
(10) |
|
|
|
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|
1995 |
1997 |
1999 |
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|
BC |
14 |
31 |
54 |
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|
SK |
3 |
2 |
18 |
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Lowest Possible Rank |
44 |
32 |
56 |
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Source: Provincial Budgets and calculations by The Fraser Institute. |
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