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VICTORIA, British Columbia (Reuters) - British Columbia set its spending for the next fiscal year at C$37.7 billion on Tuesday, saying it recognizes the North American economy is slowing even if the western Canadian province's own economy remains relatively strong.
The budget for the 2008-09 fiscal year, starting at the end of March, projects revenue of C$38.5 billion, which would leave surplus of about C$50 million after C$750 million is set aside as a contingency. Capital spending is set at C$5.8 billion, up from C$5.2 billion a year ago.
The Liberal government said it recognized that one of the province's largest industries -- lumber -- is suffering under the collapse of the U.S. housing construction market. The province's economic growth is projected to be 2.4 percent in 2008, down from 3 percent in 2007.
British Columbia's total debt is forecast to be C$37.7 billion, up from C$36.8 billion in the last budget, but the debt to GDP ratio is expected to fall to 19 percent from the 19.6 percent that was projected in the 2007-2008 spending plan.
The Pacific Coast province said its newly announced carbon tax will collect C$338 million during the year, but that will be offset by a C$440 million one-time "climate action" payment to residents.
The payment is designed to make the carbon tax revenue neutral.
Reporting Allan Dowd; Editing by Rob Wilson