British Columbia closed its most recent fiscal year with a smaller-than-expected deficit after lower capital spending and stronger revenues, Finance Minister Brenda Bailey told reporters in Victoria. The province’s final accounting showed a deficit of $7.7 billion, more than $3 billion lower than earlier forecasts.
‘Slippage’ not cancellations, minister stresses
Bailey framed the change as largely the result of what the government calls slippage — the unplanned carry-over of capital work into future years — rather than project cancellations. She said the projects remain in the plan but will be delivered later than originally scheduled.
“All of those projects are going ahead. It was quite an aggressive capital allotment at $15 billion, and the slippage of $4 billion will in fact carry over into other years,” Bailey said.
The ministry’s background statement breaks down the biggest areas of lower-than-expected spending: health facilities were underspent by more than $1.8 billion, while highways and public transit spending was down by about $1.26 billion. The update also reported savings of $466 million in education and post-secondary, and $463 million less spent on social housing, core government and other Crown corporations.
Supply chains and global pressures cited
Bailey said delays were driven largely by supply-chain challenges and the difficulty of timing major capital projects in an uncertain global environment. She distinguished routine slippage — which she said happens every year — from what the government has labelled “re-pacing,” a deliberate decision to slow or reschedule work to lower costs or better sequence delivery.
“Re-pacing is a deliberate pulling back of a project and looking at when we can deliver it and how to keep the costs down,” she said. “Slippage happens every year. The reality is that planning these major projects and measuring them exactly as how they will occur in one year is challenging.”
Revenue boost from large settlement
On the revenue side, the government reported about $2.86 billion more than budgeted, largely because of a legal settlement with tobacco companies. The agreement, described in the update, will deliver $3.6 billion over 18 years. An initial payment of $936 million was received in August 2025 and the province is counting the remaining $2.56 billion toward the 2025–26 fiscal year.
| Item | Amount |
|---|---|
| Reported deficit | $7.7 billion |
| Capital allotment | $15 billion |
| Capital slippage | $4 billion |
| Health facilities underspend | $1.8+ billion |
| Highways and transit underspend | $1.26 billion |
| Additional revenue vs. budget | $2.86 billion |
| Provincial debt (forecast) | $154 billion |
Economy and debt picture
The finance update notes the provincial economy expanded by two per cent during the fiscal year. Despite the narrower deficit, the province’s debt forecast rose by about $700 million, to roughly $154 billion.
Bailey said the government remains focused on pursuing new revenue streams and economic growth as a way to address fiscal pressures while delivering on capital commitments.
Local implications and next steps
For communities across the province, the slippage means timelines for hospitals, transit upgrades and road projects may be pushed into later years, even though the projects themselves have not been scrapped. Municipal leaders and contractors typically face challenges when capital spending is re-sequenced, including workforce scheduling and contract renegotiations.
- Major health and infrastructure projects will be rescheduled, not cancelled, according to the minister.
- Supply-chain issues were cited as a key driver of the delays.
- A significant tobacco settlement provided an immediate revenue uplift.
As the government finalizes spending plans for the coming years, municipalities, health authorities and transit agencies will be watching closely for revised timelines and funding confirmations. The update leaves open how the province will balance bringing projects forward again with managing ongoing fiscal pressures.
The finance ministry’s numbers provide a snapshot of a province navigating the competing priorities of capital delivery, economic growth and debt management in a period of global uncertainty. How and when delayed projects return to full speed will shape service delivery and construction activity across British Columbia in the years ahead.
