Wednesday, February 18, 2009

British Columbia budget

This is from the Globe and Mail.

Interesting that while many argue for tax cuts to put money in the hands of individuals who will then spend it and stimulate the economy when it comes to wages they are to be cut even though this obviously removes money from individuals and makes them less likely to spend!
This budget is an anti-union budget. Social spending even on crime prevention is being cut, the latter by a government that is supposedly tacking gang crime as a priority. No doubt the NDP in BC will suddenly be the party that wants to be tough on crime.
At least the BC government has the sense to override its balanced budget provisions. California on the other hand is stuck with a disaster as it has to balance its budget.

In B.C., lean budget sets stage for election battle
Forecasts $740-million deficit over two years; spending cuts include clawback of wage boosts for civil servants
February 18, 2009
VICTORIA -- B.C. Finance Minister Colin Hansen yesterday delivered a no-frills budget to take into the spring election that sets up a battle with the Liberals' traditional foes in the public-sector unions.
In the face of a shrinking economy, the province is cutting $3-billion from spending over the next three years, including a clawback of money that was pegged for wage increases for health care workers and civil servants in 2010.
Mr. Hansen said British Columbia will run two years of deficits - this fiscal year the province will sink $495-million into the red. That's a smaller deficit than many had anticipated, and the government expects to return to surplus in three years - in part because it will reclaim the $400-million that had been set aside for wage increases.
"Given the challenges that average British Columbia families are facing today as we go through this difficult time, it's simply not possible to put into this fiscal plan any additional dollars for general wage increases," Mr. Hansen said.
Jim Sinclair, head of the B.C. Federation of Labour, said the Liberal government is seeking to pick a fight with unions, but individuals will be caught in the middle.
"I think we are going to see more social unrest in British Columbia, more people upset that the government didn't get it," he said. He said the funding shift sends a bad signal to public-sector workers, and it offers little to families worried about riding out a recession. "This budget really says to the unemployed, 'Too bad.' "
The budget allocates $50-million this year to help the public sector do more with less - a "Transformation Fund" to help government workers get "retooled to deliver quality services to citizens with fewer staff."
The budget was welcomed by a number of business leaders as a prudent fiscal plan and was warmly endorsed by the construction industry. The province will ramp up infrastructure spending this year by roughly $1.3-billion.
"It's the construction budget," said Philip Hochstein, president of the Independent Contractors and Businesses Association, an outspoken ally of the B.C. Liberals.
"I know they are trying to do everything they can. Certainly in the next 90 days, before the May 12 election, we'll have lots of announcements."
The provincial budget plan cuts government spending in almost every sector except health, education and social services.
Even public-safety services such as prosecution and court services are facing cuts over the next three years, just days after Premier Gordon Campbell promised to target gangs in B.C. with more police and prosecutors.
"The Premier stood up on Friday and said that was one of the most critical issues to deal with, the gang violence we are seeing," said Carole James, Leader of the New Democratic Party.
"But they have cut the budget for public safety. Unbelievable."
And while Mr. Hansen said the budget protects the most vulnerable, there appears to be little new money for tackling poverty and homelessness. Funding for employment and housing services will be cut, while the number of front-line workers handling income assistance will drop.
"It's about stability for B.C. families, it's about jobs for B.C. families and it's about confidence," Mr. Hansen said in a question-and-answer session with reporters shortly before he delivered his budget speech in the legislature.
The main economic stimulus effort is reserved for building new roads, schools and hospitals, while Mr. Hansen said he is counting on the 2010 Winter Olympics to help fuel a turnaround.
"Dollar for dollar, the Olympic Games may be the best investment we will every make," he said in his speech. "B.C. has been through tough times before. Each time, we've risen to the challenge. And each time we've emerged stronger."
John Winter, head of the B.C. Chamber of Commerce, said it is a "safe budget," but he doubts whether the province will turn the corner next year.
"I don't know if they are planning for the worst - it could be a lot worse."
There are several key pieces still missing from Mr. Hansen's fiscal plan.
The Finance Minister could not answer questions about funding for Olympic security because the federal government has yet to sign off on the cost-sharing arrangement.
Nor could he say what the cost to taxpayers will be for building the $3-billion Port Mann bridge after the private-sector consortium in charge of construction announced it could no longer finance the new toll bridge on its own. That deal is still under negotiation.
As well, the plan calls for more cuts that have yet to be found: $250-million worth that won't be identified until after the May 12 election.
The economy is now forecast to shrink by 0.9 per cent in 2009, while the government is counting on a rebound in 2010.
Last week, the legislature was recalled early to pass legislation to set aside B.C.'s balanced-budget law so that Mr. Hansen could bring in yesterday's fiscal plan.
The Finance Minister said his government still struggled to keep spending down.
"What British Columbia families are looking for today is a sense of responsibility," he said.
"But it's also a budget that says governments need to live within their means. There is nobody around the caucus or the cabinet table that is enthusiastic about going into deficit this year."
The largest program spending increase is in health care. Health spending is set to increase by almost 6 per cent this year, an increase of more than $800-million.

No comments: