BC’s Provincial Deficit Hits Record $11.6B

The B.C. government is in the red to the tune of $11.6 billion and anticipates this shortfall will grow to $12.6 billion by next year.

The record high deficit forecast for the current fiscal year—$665 million more than the projections made in the February budget—was announced by Finance Minister Brenda Bailey during the Sept. 15 release of the province’s first quarter financial results.

B.C.’s NDP government is also projecting a deficit of $12.3 billion in the 2027-2028 fiscal year.

Bailey said the shortfall is due in part to the ongoing trade dispute between Canada and the United States.

“While B.C.’s diversified economy is better positioned than many to weather these headwinds, there’s no doubt that tariffs are challenging our economy and there is pressure on our fiscal position,” Bailey said in a statement.

“We’re being focused with our spending, making smart reductions where we can, being strategic with our investments to drive economic growth and foster innovation to build a stable economic future for B.C., and support the services people count on.”

The government’s budget overlooked the impact of eliminating the carbon tax, creating a $1.8 billion gap in provincial revenues, according to the quarterly report. The increased deficit is also attributed to a decline in revenue sources, including a $247 million shortfall in property transfer tax thanks to a 5.6 percent drop in home sales this year.

Bailey said the government is contending with reductions in various revenue streams, including prices for commodities such as natural gas, copper, and coal that are lower than anticipated, as well as diminished stumpage rates in the forestry sector.

The province is also dealing with higher than anticipated wildfire costs and has yet to receive a payment from the federal government’s disaster fund.

“In the current fiscal and economic climate, we’re focusing on the key services that people and families need, and protecting the services we all depend on now, and for the future,” Bailey said.  “This work is ongoing as we plan for Budget 2026.”

A decline in economic growth is anticipated in 2025 and 2026 due to the effects of tariffs, a sluggish global economy, and a downturn in the housing market, Bailey said.

But the 2025-2026 deficit will be partially offset by an increase in corporate income tax revenues and by British Columbia’s $2.7 billion share of the landmark $32.5 billion lawsuit against tobacco companies, the quarterly report notes.

The B.C. government has received $936 million of its total allocation, but it is recording revenue that is expected to arrive over the next 18 years.

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Greater Vancouver Board of Trade vice-president David van Hemmen said the province’s latest quarterly report shows government finances “are not on a sustainable path.”

“Debt-fuelled spending and persistent deficits leave less room for investment in the services British Columbians depend on,” he said in a statement.

“We need a clear and transparent plan to put provincial finances on a sustainable footing, strengthen confidence, and create the conditions for private sector growth. We need an agenda for economic growth that lowers costs, enables faster building and provides new market opportunities.”

The B.C. branch of the Canadian Federation of Independent Business (CFIB) was also critical of the province’s financial results.

“The province’s financial picture is deteriorating at a moment when small businesses need stability,” CFIB director of legislative affairs for B.C. Ryan Mitton said in a statement.

“A record setting $11.6 billion deficit should be a wake up call. Small business owners are tightening their belts and making hard choices every day. They expect government to show the same restraint.”

Bailey said the province’s “diverse industries and access to global markets” are helping support B.C.’s economy in the face of trade uncertainty.

“We’re building our province’s position as the economic engine of a stronger and more self-reliant Canada,” she said, adding that the province is moving forward with “major projects, including those identified by the federal government, that put people to work, drive economic growth and support strong communities.”

She said B.C.’s economy is expected to recover in the medium term, supported by a stable labour market, exports of liquefied natural gas, and increased residential construction.