BC Liberals save $1 billion. Now it's time for the rest.

I suppose that the BC Liberals should be congratulated for this particular piece of news. Via the Colonist:

Victoria, B.C. - A year of deep cuts to B.C. government programs and services has resulted in a deficit that’s almost $1 billion less than expected, Finance Minister Colin Hansen said yesterday. But that doesn’t mean there’s more money to spend, or that the government will return to balanced budgets any faster, he warned.

The province ran a deficit of $1.779 billion in the fiscal year that ended March 31, say public accounts statements; the forecast, made in September, was for $2.775 billion.

Hansen said the reduction is primarily due to less spending. Provincial revenue, including personal and corporate income tax and natural resource royalties, continued to slump. But the government cut $833 million in spending through internal belt-tightening, said Hansen. That included layoff notices to 772 civil servants, and cuts to discretionary, administrative and travel spending in virtually every government ministry.

Hansen said the cuts were so effective — for example, travel budgets fell 50 per cent, instead of a targeted 22 per cent — that the government exceeded its goals.

Nonetheless, lesser-priority items will still have to be cut to fund future projects, said Hansen. “We do not anticipate that we’re going to have fiscal room in these next few years to expand new programs unless there are savings found elsewhere across the fiscal plan.”

Read the rest here.

Pat yourselves on the back, guys. You actually did your job. The hundreds of millions of dollars coming from the federal government to offset the implementation of the Harmonized Sales Tax probably didn't hurt matters much, but let's put that aside for the moment in favor of a small laundry list of places where the province could be doing so much better.

After all, this is the same goverment whose sale of BC Rail is actually costing more than half of the profits from that particular corruption-scandal-inducing deal:

The public accounts for 2009-10, released Thursday, supplied the latest figure for the ever-growing indemnity  associated with the sale of government-owned BC Rail to CN.

As of March 31 of this year,, the province was on the hook for $600 million.

This represents the provincial side of one of the more controversial aspects of the $1 billion sale. Along with acquiring the provincially-owned railway and its rolling stock, CN paid a premium to acquire so-called tax room -- the option to use the accumulated financial position of BC Rail to reduce its own corporate taxes payable.

But fearing that the federal tax department might disallow all or part of the claim, it sought a provincial indemnity for the full amount. The province, accordingly, provided same.

Read the rest.

And let's not forget the Olympic Games. Colin Hansen - who is also doubling as Olympic minister these days - might want to explain this particular aspect of the province's finances a little more thoroughly:

VANCOUVER — Originally estimated to require $600 million in provincial investments, the Games ended up costing B.C. much more, including an additional $165 million for security and $160 million for hosting, advertising and community engagement programs, according to the report by the B.C. Olympic and Paralympic Winter Games Secretariat.

But buried within the report are additional costs its says were borne by crown corporations, including ICBC, which spent $24.1 million underwriting insurance to the fleet driven by employees of the Vancouver Organizing Committee, and a vanity license plate program. Other costs carried through crown corporations like B.C. Lottery Corp and B.C. Hydro, which like ICBC were sponsors, are not revealed in the report.

The report also doesn't include the roughly $765 million cost of rebuilding the Sea to Sky Highway or the $2 billion cost of the Canada Line between Vancouver, Richmond and the Vancouver International Airport. Nor does it include an accounting of all the monies spent by the federal and municipal governents.

The report also gives an indication for the first time ever how deep Vanoc's financial troubles became during the worldwide economic crisis in 2009. Although Vanoc was supposed to fund most of its $1.7 billion operating budget from private sources such as sponsorships and ticket sales, B.C. was forced to give it operational funding of $24.5 million from a contingency fund. The province also put another $25 million into an "operating contingency reserve".

Read the rest. Vaughn Palmer, as usual, writes the definitive article in the Sun:

Reporters chased Hansen around the block several times at the press conference (I was listening from Victoria over a telephone link), but never got him to admit to the dodgy aspect of his bookkeeping.

He finished, as he started, saying he'd be very disappointed if news reports represented the $925-million aggregate figure as an overrun on the original $600 million all-in cost because "that is not what we said."

Oh, really.

Premier Gordon Campbell in a speech about the Olympics on Sept. 26, 2002: "What will it actually cost us? We're talking about an incremental investment over the next seven years of $600 million."

Campbell in the legislature, May 9, 2006: "Mr. Speaker, I don't know how you say this more clearly so that the members of the Opposition understand this. Hosting the Olympic Games is $600 million. There is a $600-million budget ... Let there be no question. This side of the House is going to provide $600 million to stage the Olympics. We are very clear about our commitment to hosting the Olympic Games. It's $600 million."

Hansen from the same debate: "I have never once said that the cost of staging the Olympic Games is going to exceed $600 million to the taxpayers of British Columbia, because if I said it, it wouldn't be true ... I have every reason to expect that the Games will be delivered without any increased obligation to the taxpayers over and above that $600 million."

Campbell, May 25, 2006: "The Olympic cost is $600 million. That's the cost. I believe we are going to deliver the Olympic Games for $600 million."

Campbell, Sept. 13, 2006: "Let's be clear. The cost of the Olympics is 600 million bucks. That's what the fact of the matter is."

Read the rest here.

( In the meantime, while I'm ripping off Vaughn Palmer, his analysis of the deficit reduction is quite worthwhile reading:

The Liberals were warned about the deteriorating economic situation before they went with that lowball deficit on the eve of last year's May election. The accounts released Thursday support the charge of unwarranted optimism.

Key sources of revenue would appear to have plummeted from the day the budget was tabled in the legislature in February 2009. Income taxes fell $1 billion below the government forecast; natural resource revenues slid by $1 billion as well. Sales taxes were off by $300 million.

The Liberals managed to contain the rising tide of red ink below the $2-billion mark only because of a combination of fiscal discipline and some good fortune.

Read the rest. )

I don't really have too much to say about this $1 billion, to be honest. I mean, what's to say? Good for them, but keep going. There's a lot of money to recover, and a long ways to go before that happens. I don't want to get too caught up in congratulations for the BC Liberals until then - after all, they only did what they were supposed to do. For once, they actually exceeded our expectation by acting like responsible fiscal managers. Wow. Color me impressed.

The damage was done a long time ago. A history of backsliding and petty deceit has pretty much robbed the Liberals of what good will I had a long time ago. This $1 billion is welcome news, but it's going to be a long time before the Liberals recover a whiff of respectability about themselves.

Wake me when that happens.