Provincial budgets contain a blizzard of numbers, and the one unveiled last week was no exception.
But one number jumped out at me more than any of the others.
That would be the average annual percentage increase in how much of our tax dollars are being paid to service the rapidly rising provincial debt.
The average annual increase in a decade’s worth of budgets is almost 14 per cent. That is about twice the percentage increase when compared to annual increases to health care spending.
It is an even more alarming number when only the last four years, plus the forthcoming fiscal year, are grouped together. In this time frame, the annual increase is an astonishing 22 per cent.
How did it get to this point?
The answer is two-fold: huge annual deficits and a massive amount of capital infrastructure spending.
Since Premier David Eby took over from John Horgan, his government has racked up almost $40 billion in total deficits plus almost another $100 billion on the construction of highways, bridges, transit lines, schools, health facilities and housing.
There are different ways of viewing this situation.
On the one hand, the public clearly wants more of the items I just listed. Who opposes the building of more schools to lessen crowded classrooms, or building more health facilities to make health care more accessible?
However, another view is to liken the escalating debt to a ticking time bomb. At the end of the updated three-year fiscal plan (ending in 2028-29), the overall provincial debt will be at least $235 billion (up more than $145 billion from when Eby took over).
By that time, annual debt servicing costs will be almost $9 billion, substantially more than we pay each year for child welfare, social assistance, community living and pharmacare. In fact, at that lofty level, debt servicing costs are closing in on how much it costs to fund the K-12 education system.
There is also the not-so-small matter of a likely credit rating downgrade coming from the bond rating agencies. Such a move would make it more expensive to borrow, and therefore, the debt servicing costs will be even higher (talk about a vicious cycle).
There is no easy way to defuse this time bomb.
More than 70 per cent of what the government spends money on is health care, education and social services. I detect no public appetite for spending cuts in those areas.
The answer, then, seems more likely to come from the revenue side of things, although given the essentially flat revenue streams of the past few years, this seems like a bit of a Hail Mary pass.
While government spending has gone from about $80 billion four years ago to almost $100 billion in the next fiscal year, revenues haven’t come even close to keeping pace. In fact, revenues have only risen by about $4 billion, which is just one-fifth of the spending increase.
A miracle of sorts is required here.
No government can significantly raise taxes and keep its political skin intact. Cutting the most expensive areas of government isn’t going anywhere either when it comes to retaining political capital.
What is needed is something like an explosion in the price of commodities, natural gas, lumber and coal, preferably all at the same time. Given the chaos U.S. President Donald Trump has unleashed on the world’s economy, I suppose there’s a chance something like this could happen.
In the meantime, there is a distinct sound emanating from last week’s province. The document is sitting on my desk at the B.C. legislature. I swear I can hear it: tick, tick, tick.
Keith Baldrey is the legislature bureau chief for Global TV.
Keith.Baldrey@globalnews.ca
