THE CANADIAN PRESS — VICTORIA - British Columbia ended the fiscal year with a far smaller deficit than predicted in last year's provincial budget, which the finance minister attributed to stronger-than-expected economic growth and good management.
The province ended fiscal 2010 with a $309-million deficit compared to the $1.7-billion deficit forecast in the budget, Kevin Falcon said on Monday as he released the 2010-2011 public accounts.
"We've seen stronger economic growth in B.C. suggesting consumer confidence has remained strong under the HST," Falcon said in a release. "This demonstrates our fiscal plan is working and we will continue to take a cautious approach to spending."
B.C. also benefited from a one-time federal payment of $769 million last year in transition funding for the Harmonized Sales Tax.
The results put the books on course to return to a balanced budget as planned in 2013-2014, Falcon said.
But he warned there are still risks to B.C.'s economic recovery, including the possibility that voters will vote in a referendum this summer to scrap the HST, forcing the province to give back the federal incentive payment.
He also said fluctuating commodity prices and the slower-than-expected recovery in the U.S. are out of the government's control.
NDP finance critic Bruce Ralston said Falcon downplayed the role the transition payments played in boosting the province's fiscal health.
"It is pretty standard for them to project a higher deficit and then come in lower and then pat themselves on the back," he said in an interview. "It's not really a spectacular achievement."
Ralston added the finance minister's warning against quashing the HST is "misleading at the very least." He said even if transition money had to be paid back, it wouldn't happen in one lump sum.
"The real hole that's blown in the budget is by cutting the HST rate in the future. That really causes problems," Ralston said.
Falcon has said that if voters elect to keep the HST, the rate will be reduced in three years to 10 per cent from 12.
"He rattles on about uncertain economic times and that we've got to be cautious and prudent. Well, why would you commit to a policy that three years out cuts close to $1.8 billion off your revenue?"
The group that's been touting the benefits of the HST, however, said the budget picture was positive.
Mike Jagger, co-chair of the Smart Tax Alliance, said a jump in retail sales by 5.3 per cent signals that consumer confidence has increased — even with the HST in place.
"The doomsday scenario that HST opponents were going on about has clearly not come true," he said in a release. "The HST is helping our economy grow and create jobs for families and future generations."
The financial update also said the provincial economy grew by four per cent in 2010 — better than the national average of 3.3 per cent.
Spending on programs and services, primarily in health and education, increased by $903 million over the previous year.
Cabinet members will not receive half their salary holdbacks due to this year's deficit. Since each ministry achieved its individual fiscal target, every member will receive the other half.
Deficits are expected for the next two years.