Statement: B.C.’s finances remain on an unsustainable trajectory
Today's First Quarterly Report continues a troublesome pattern. With each update over the past five years, B.C.’s fiscal position has deteriorated without a path to stabilise it. Credit ratings agencies have repeatedly underscored that B.C. has the worst fiscal outlook of any peer jurisdiction. They have also been clear that “this deterioration is driven by policy-driven spending resulting in structural deficits and rising leverage.” (Moody’s 27/3/2026).
“B.C.’s fiscal position is concerning, but it’s the trajectory that’s alarming,” said David Williams, BCBC’s Vice President of Economics. “The speed at which B.C.’s public finances have deteriorated over the past five years is remarkable.”
The 2026/27 projected deficit climbs to $13.8 billion, roughly $450 million higher than in Budget 2026 tabled seven months ago. Real economic growth for 2026 was revised down to 0.9%, from 1.3% expected in the budget. However, external factors actually provided a boost to the government’s coffers as higher inflation lifts personal and corporate income tax receipts, and higher commodity prices lift natural resource revenues.
Notwithstanding higher revenues, projected operating expenses have ballooned by a further $1.2 billion or about $200 per British Columbian relative to the budget. For the first time in history, provincial operating expenses will cross $100 billion in 2026/27: a full year earlier than projected in February’s budget. Controlling spending growth continues to be B.C.’s fiscal Achilles’ Heel. Since 2021/22, revenues have increased by 4 per cent per year while operating spending has grown by 8 per cent per year.
“Persistent deficits send a clear signal to families and businesses that taxes will need to be significantly higher in the future to stabilise the government’s finances,” said Jairo Yunis, the BCBC’s Director Policy. “That signal has an impact on business decisions whether to invest, hire, and/or expand, and on households deciding whether they want to stay in B.C.”
We reiterate that the government should not go ahead with the $5 billion over three years in tax increases as announced in the budget including freezing personal income tax thresholds and expanding B.C.’s uncompetitive provincial sales tax. It must find a path to stabilise B.C.’s finances by managing its own spending growth.
Details
Revenue (up $789 million from budget)
Personal and corporate income tax rose about $887 million ($471 million and $416 million) due to one-time prior-year tax settlements and higher inflation expectations (2.1% in Budget 2026 vs 2.5% in this quarterly update) that will increase nominal receipts.
Those gains were largely offset, by about $836 million, from natural gas royalties which fell $531 million (roughly $300 million of it the correction of a calculation error in the February budget forecast), and property transfer tax receipts which fell $305 million on weaker home sales.
Mining revenue was up $209 million on stronger coal, copper and gold prices and a new mine, and federal transfers rose $284 million net, effectively all of it one-time funding for affordable housing.
Expenses (up $1.2 billion from budget)
Wildfire management costs are up $614 million (total fire spending now $850 million), and refundable tax credits increased by $458 million.
Debt and debt servicing costs
Total provincial debt has doubled from $90 billion in 2021/22 to $180 billion in 2026/27.
Debt servicing costs have tripled from $2.7 billion in 2021/22 to $6.3 billion in 2026/27. B.C. is spending more money on interest payments than it allocates to the Ministry of Social Development and Poverty Reduction.