**British Columbia budget: Balancing deficit reduction, election promises and tariff threats**

B.C. budget struggles to balance deficit reduction, election promises, tariff threat
Provincial fiscal outlook to be released on same day Trump tariffs go into effect

Chad Passon · CBC News · Published March 4, 2025 at 8:00 a.m. EST | Updated 4 hours ago

On Tuesday afternoon, B.C. Finance Minister Brenda Bailey will release the province’s 2025-2026 budget. The budget seeks to manage a growing deficit, maintain services for B.C. Columbians and respond to U.S. tariffs — a 25 per cent fiscal hit that goes into effect the same day.

“I know the question on everyone’s mind is, how do you budget in a situation like this?” Bailey said at a pre-budget media event.

This latest budget, Premier David Abe’s third, comes five months after a provincial general election in which the British Columbia NDP won on promises to spend on public safety, transportation and health care.

Abe’s inaugural speech in February indicated that the budget would focus on everyday issues, such as health care, affordability and the economy.

The NDP has already backed away from a promise to provide a $1,000 food stamp and tax cuts for the middle class that were due to be rolled out to 90 per cent of British Columbians by this spring. Those promises would have cost an estimated $1.8 billion.

CBC will broadcast Bailey’s budget live at 1:05 p.m. Pacific Time.

BC NDP election promises put to the test
The new parliamentary term begins at the “most critical time” in BC’s history since World War II.

‘Support the people’

The province blamed the repeal of the tax cuts on Trump’s tariffs, which are projected to result in the loss of 124,000 jobs by 2028, a $3.6-6.1 billion annual loss to corporate profits and a $1.6-2.5 billion annual loss to government revenue.

Bailey indicated on Monday that his fiscal plan due Tuesday will preserve services, programs and spending and use successive budgets to plan for gradual deficit reduction.

“Now is not the time for drastic spending cuts; it is the time to support the people,” he said.

Peter Milobar, the British Columbia Conservative Party’s finance critic, said he expects the new budget to push the deficit to $10 billion or more. He expressed skepticism that the NDP will show discipline in its fiscal management.

“Now, with the economy getting worse and the path to a balanced budget getting more difficult, we’re supposed to believe that they’re back on track and they’re going to get a balanced budget. That’s not logical at all,” he said.

How finances are impacting the British Columbia election
British Columbia’s fiscal position has shifted from a sustained surplus in the 2010s to a deep deficit. The current deficit for 2024-25 is now $9.4 billion, $429 million higher than the first-quarter forecast. The increase is largely due to lower revenues.

British Columbia’s December fiscal update showed that projected revenue for 2024-25 will be $81.4 billion, down $322 million from the first-quarter report. The decline is largely due to cuts to corporate income taxes, sales taxes and federal government grants.

Projected spending was also announced at $90.9 billion.

The province’s total debt will reach $130 billion by the end of the current fiscal year, $1.4 billion higher than previously forecast.

The good news?

The province’s projected debt-to-gross domestic product (GDP) ratio — a measure often used by investors and credit rating agencies to analyze a government’s ability to manage its debt — remains one of the lowest in Canada at 22.3 per cent.

To shore up the budget and find savings, the province has launched a comprehensive government spending review, will freeze public service hiring and will accelerate 18 resource projects.

In late January, 13 independent private-sector forecasters from across Canada who make up the British Columbia Economic Forecasting Council said that in the absence of tariffs, British Columbia is expected to see sustained economic growth due to its “diverse export network and resource-rich environment.”

“You’re going to see a budget that sets us up for success, regardless of what happens with tariffs,” Bailey said.