B.C. budget aims to balance deficit reduction, election promises and tariff threat

On Tuesday afternoon, B.C. Finance Minister Brenda Bailey will present the province's 2025-26 budget, which will attempt to manage a ballooning deficit, protect services for British Columbians and respond to tariffs from the U.S. — a 25 per cent fiscal slap that comes on the same day.

"I know the question on everyone's mind is how do you build a budget in this situation?" said Bailey on Monday at a pre-budget media event.

This latest budget, Premier David Eby's third, comes five months after the provincial general election which was won on promises by the B.C. NDP to spend on priorities such as public safety, transportation and health care.

Eby's throne speech in February indicated the budget will focus on so-called kitchen table issues, such as health care, affordability and the economy.

The NDP has already backtracked on a $1,000 grocery rebate and middle-class tax cut which would have applied to 90 per cent of British Columbians by this spring but came with an estimated $1.8-billion price tag.

'Stand up for people'

The province blamed the cancelling of the tax cut on Trump tariffs, which it estimates would result in 124,000 job losses by 2028, an annual decline in corporate profits between $3.6 billion and $6.1 billion and reduction in annual government revenue between $1.6 billion and $2.5 billion.

On Monday, Bailey telegraphed that her fiscal plan on Tuesday would protect services, programs and spending while using "successive" budgets to plan for an eventual reduction in the deficit.

"Now is not the time for deep cuts; it's the time to stand up for people," she said.

B.C. Conservative finance critic Peter Milobar said he's expecting a budget that pushes the deficit to $10 billion or beyond. He said he's skeptical the NDP will show fiscal restraint. 

"Now, with a worsening economy, with an even harder path to get to a balanced budget, we're supposed to believe that they've actually saw the light and are going to get back to a balanced budget," he said. "It simply doesn't hold up to logic whatsoever."

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B.C.'s provincial finances have gone from stable surpluses in the 2010s to deep deficits, with the current 2024/2025 deficit now at $9.4 billion, up $429 million more than the first-quarter forecast, mainly due to lower revenues.

B.C.'s December fiscal update said revenue for 2024-25 was forecast to be $81.4 billion, $322 million lower than the first quarterly report, primarily due to lower corporate income taxes, sales taxes and federal government contributions.

Expenses were forecast to be $90.9 billion.

Total provincial debt is projected at $130 billion by the end of the fiscal year, $1.4 billion more than previously forecast.

The good news?

The province's forecast debt-to-GDP ratio — a measure often used by investors and credit rating agencies to analyze a government's ability to manage its debt load — remains among the lowest in Canada at 22.3 per cent.

To try to bolster its budget and look for savings, the province has initiated a whole-of-government spending review, paused public service hiring and will fast track 18 resources projects.

In late January, the 13 independent private sector forecasters from across Canada that make up B.C.'s Economic Forecast Council said that in the absence of tariffs, they expected steady economic growth for B.C. due to its "diverse export network and a resource-rich environment."

"You're going to see a budget setting us up to success regardless of what happens with tariffs," said Bailey on Monday.