British Columbia's budget deficit set to grow

Thu Jul 9, 2009 3:21pm EDT
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VANCOUVER, British Columbia (Reuters) - British Columbia's budget deficit will almost certainly be worse than the forecast C$495 million ($427 million) as the Canadian province's economy continues to sag, Finance Minister Colin Hansen said on Thursday

Hansen said residents will have to wait until September to learn how much larger, but revenues from corporate and personal income taxes were lower than expected when the annual spending plan was unveiled in February.

"Given what I know today I am not optimistic at all that a C$495 million number is anywhere near possible," Hansen told reporters.

Canada's westernmost province is scheduled to release a revised 2009-10 budget on September 1, and Hansen said the economic situation in Canada and the United States was still too volatile to predict what that revised deficit would be.

Spending for the 2009-10 fiscal year, ending March 31, was pegged in February at C$39.3 billion, with revenues of C$38.8 billion.

Hansen also said the weaker revenues cast doubt on the province's plan to return to a budget surplus for the 2011-12 fiscal year. It was projecting a deficit of C$245 million deficit in the 2010-11 budget.

The provincial government said on Thursday it ended the last fiscal year with a surplus of C$78 million, up from the C$50 million it had projected.

British Columbia's economy is largely resource based -- notably forestry and mining -- and has been hit hard by the economic slowdown in major export markets such as the United States.

Hansen said personal income tax revenues also came in lower than expected last fiscal year, largely because of people's investment losses.

($1=$1.16 Canadian)

(Reporting by Allan Dowd, editing by Rob Wilson)