BALDREY: B.C. budget ‘surplus’ could disappear quickly

As I began making my way through the documents that   make up the latest B.C. government budget last week, a deputy minister came up to me and said he had given the budget a unique name: “the caseload budget.”

By that, he meant almost all of the new spending is targeted at so-called “caseload” areas of the budget, which reflect increased demand for certain government services.

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So only five of 20 government ministries received a funding increase of any consequence. The rest of the government’s operations had funding reductions or increases that do not keep pace with inflation.

This reflects the extremely tight box into which Finance Minister Carole James has squeezed her balanced budget.

The only ministries getting new money are Children and Family Development ($140 million) Education ($120 million), Social Development ($115 million), Advanced Education ($36 million) and the biggest by far: Health (a staggering $1.3 billion).

These allocations all reflect increased needs for social services, rising enrolment in the K-12 education system and a steady rise in the number of people needing to utilize the health-care system. As well, contract settlements with public sector employees account for a big chunk that money.

And within some ministries facing a budget cut, some services are indeed being enhanced. Take Municipal Affairs and Housing: its overall ministry budget is being chopped by a considerable amount (mostly because local government transfers being greatly reduced) but the housing part of the portfolio will get a $20 million lift.

While no doubt these funding hikes will be welcomed by those who utilize  these services, I have to wonder at how disappointed some people may be about other government operations that are being squeezed by a de facto spending freeze in non-“caseload” areas.

For example, spending on arts, culture and sports will be slightly reduced. The environment ministry is getting a slight funding cut, which means less spending in such areas as environmental protection, B.C. Parks and conservation services.

Even a supposed priority of the NDP government is not immune to the belt-tightening: the climate action line item in the budget shows a cut of almost $2 million.

One area of spending that is not being curtailed in any way, shape or form is on the capital spending side of the ledger. There are plenty of infrastructure projects (schools, roads, bridges etc.) in the plan, to the tune of a whopping $23 billion over three years.

James’ budget shows a projected surplus of just $227 million. She has built in a “forecast allowance” of $300 million, plus a contingency fund of $600 million. However, that accounts for just 1.5 per cent of the total $60 billion budget, so she has precious little room to move if things turn bad.

And things can indeed turn bad, very quickly.

The economic impact of the emerging coronavirus is an unknown, but a number of economists and analysts expect it to be substantial. Given the enormous influence China has over the world economy, B.C. will not be immune from any downturn that results.

As I write this column, almost 50 vessels are anchored in Port of Vancouver entry points in English Bay and on the west side of the Gulf Islands.

Their inability to access the port is likely linked to a curtailment of rail services due to protest blockades erected in support of opposition to the Coastal GasLink natural gas pipeline in northern B.C. The blockades are costing the Canadian economy about $425 million a day.

If the pipeline dispute is not resolved soon, its economic impact will inevitably eat into the B.C. government’s projected revenues over time. Those ships lying off our coast are largely container ships, carrying items that constitute about 90 per cent of everything we use, buy and consume every day.

At some point, shortages may occur (back to the impact the coronavirus has on China, the source of so much of that shipped material). Retail trade activity, to name just one area, could be in for a real slump.

The NDP’s latest budget will no doubt protect the rising “caseloads” out there. However, a combination of a general economic slowdown and international and national events may smother other services.

Keith Baldrey is chief political reporter for Global BC.

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