British Columbia Finance Minister Kevin Falcon edged away Monday from his government's firm commitment to balance the provincial budget by 2013-14, hinting for the first time that the goal may not be reachable.
"If international events continue to deteriorate, and that hammers B.C., I am not going to be able to say we can balance at all costs," Falcon told reporters.
"I'm just not going to be irresponsible about saying, 'Well damn the torpedoes, it's going to be balanced in 2013-14 no matter what.'" His comments came as he released B.C.'s second quarterly results, announcing that B.C.'s deficit projections have worsened over the past three months.
He said B.C. now expects a deficit of $3.1 billion for the 2011-12 fiscal year, up $313 million from the projection he made at the end of the first quarter, just three months ago.
Falcon said he remains committed to the government's 2013-14 goal if at all possible, but won't be able to make a clear projection on it until mid-January.
He said he will be watching some key indicators over the next month, monitoring how the international economic situation unfolds and will meet again with independent economic forecasters.
Falcon's comments are significant, given the B.C. Liberal government has set out in law it must return to balance by 2013-14, and has often cited that as a demonstration of its ability to manage the economy better than its political opponents.
The next provincial election is scheduled for May 2013, months after the B.C. Liberals had hoped they could table their first post-recession balanced budget.
Falcon has said previously that the government will need to find $458 million in cuts or added revenue for 2013-14 if it is to balance the budget that year. Numbers released Monday show the situation has since worsened, meaning the province may have to make up as much as $700 million in 2013-14 if it wants to balance in that year.
Regarding the second quarterly results, Falcon said the change reflects a $303-million decrease in revenue, due to factors such as reduced expected income from the Insurance Corp. of B.C., lower corporate income tax revenues and the impact of lower commodity prices.
He said there has also been some additional spending on flood-related costs. As with the first quarterly update, the deficit figure includes the full $1.6 billion British Columbia is required to repay Ottawa for cancelling the harmonized sales tax.
New Democratic Party finance critic Bruce Ralston said Monday the worsening economic figures come as no surprise.
"I think Mr. Falcon has run hard into the wall of reality on the financial side in terms of what's happening globally."
Falcon added there is a $600-million contingency fund for areas deemed to absolutely require increased funding.
