Wildfire costs were $762 million higher than planned in the 2023 budget, and revenue from natural gas fees was $1.2 billion lower, according to the latest update.
A record $966 million in wildfire spending and falling natural gas prices will increase British Columbia’s projected deficit this fiscal year by $2.5 billion, bringing the figure to $6.7 billion.
Finance Minister Catherine Conroy said during the release of the province’s first quarter report for 2023-2024 that the cost of responding to B.C.’s record wildfire season was seven times higher than planned in the 2023 budget. He said it was $62 million more.
This additional cost was the second-largest factor in the projected deficit increase, behind the decline in natural gas royalties, which were $1.2 billion below budget projections.
“We were already expecting prices to come down from last year’s highs,” Conroy said. “But we didn’t expect it to decline so quickly.”
British Columbia initially expected to receive $2 billion in natural gas fees this year, after collecting $2.3 billion in the 2022-2023 fiscal year.
The latest forecast calls for royalty income of $837 million this year.
Conroy said a warm winter in Europe and the United States earlier this year and global natural gas stockpiles contributed to the sharp decline in natural gas prices, which soared in the spring and summer of 2022 due to the Ukraine war.
Despite the large deficit, the state will not cut services, introduce new fees or raise taxes to balance the budget, he said, adding that maintaining government spending is critical to economic growth. He said he believed that.
“In difficult times, successive governments have cut support, raised prices and cut services,” Conroy said. “That’s the wrong approach. No matter what, we will continue to protect our people and invest in the services they need, because they are what build our state and our economy. .”
Overall, the latest forecast shows the state’s economy is doing better than expected, with economic growth expected to grow 1.2% this year, up from the 0.4% originally expected.
However, Conroy expects uncertainty surrounding high interest rates (which he expects to last longer than expected), as well as weak global export demand and continued inflationary pressures, to further weigh on growth. has been done.
New forecasts predict economic growth will reach 0.8% next year, just over half of the 2023 budget proposal.
The quarterly report said there are a number of statistics that point to B.C.’s “resilient” economy, including “relatively low” debt levels, high population growth and a 15.5 per cent increase in housing starts so far this year. .
But the report also highlighted ongoing concerns, including “subdued” consumer spending and mixed home sales activity.
Conroy said B.C.’s diverse economy and strong fiscal plan puts the province in a good position to weather global uncertainties such as inflation and high interest rates.
Asked if the state expected wildfire spending to increase by $1 billion every year going forward given the onset of climate change, Conroy said he hoped not.
“While the situation is challenging, we are hopeful that with the mitigation measures and efforts we are taking, we can bring this number down.”
The minister said in February that deficits were likely “for the next few years” and that “things probably won’t be as rosy” as they were last year, when the province had a surplus of $704 million.
The state is scheduled to release its second quarter fiscal update in November before submitting its 2024 budget on February 22 next year.
This report by The Canadian Press was first published Sept. 27, 2023.
#billion #wildfire #costs #push #B.C.s #projected #deficit #billion