VICTORIA — British Columbia closed its latest fiscal year with a smaller-than-expected deficit after the government recorded lower capital spending and stronger revenues, Finance Minister Brenda Bailey said Monday.
Deficit drops as projects carry over
The province’s final numbers show an operating shortfall of $7.7 billion for the year ending in March — more than $3 billion lower than previous forecasts. The change reflects a mix of delayed capital spending, savings across several ministries and an unexpected boost to revenues from a legal settlement.
Bailey characterised much of the change as “slippage” rather than cancellations, saying projects originally planned for the past fiscal year will proceed but be pushed into future years.
“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.”
The government’s background statement breaks down the areas where spending was below budgeted levels. Health-care facility spending was down by more than $1.8 billion, while highways and public transit outlays fell by about $1.26 billion. Education and post-secondary spending came in roughly $466 million under plan, and the province spent about $463 million less than budgeted on social housing, core government and other Crown corporations.
Slippage versus deliberate re‑pacing
Bailey drew a distinction between slippage — delays that happen as projects are planned and delivered — and deliberate “re-pacing,” where the government adjusts timing to manage costs and fiscal pressure.
“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. But she also noted that slippage is a recurring phenomenon: planning complex capital projects to exact annual timelines is difficult, particularly amid ongoing supply‑chain pressures and global trade tensions, she said.
Revenue boost from tobacco settlement
On the revenue side, the update shows about $2.86 billion more than previously forecast. A large portion of that improvement stems from a legal settlement with tobacco companies valued at $3.6 billion payable over 18 years.
The province received an initial payment of $936 million in August and has counted the remaining $2.56 billion toward the 2025–26 fiscal year in its final accounting.
Bailey said the province’s economy grew by about 2 per cent during the last fiscal year and that developing new revenue streams remains central to the government’s fiscal plans.
Debt, growth and what this means for services
While the deficit narrowed from the forecast, the province’s reported debt moved higher — up roughly $700 million from prior expectations to a figure reported as $154 in the government release. The update frames this as part of the trade-offs the government is managing between maintaining capital plans and re-sequencing work to limit near‑term spending.
Municipal leaders and health authorities will be watching closely for timing changes on major projects, especially hospitals, transit and housing developments that were among the items identified as underspent. Although the government insists projects are not cancelled, delayed delivery can still affect local construction schedules, contractor planning and community timelines for when services become available.
- Deficit: $7.7 billion (final for year ending March)
- Capital slippage: $4 billion of a $15 billion allotment to be carried forward
- Revenue gain: $2.86 billion higher than budgeted (including tobacco settlement)
| Item | Amount (as reported) |
|---|---|
| Deficit | $7.7 billion |
| Health-care facility spending below budget | $1.8 billion |
| Highways and transit underspend | $1.26 billion |
| Education underspend | $466 million |
| Social housing and other underspend | $463 million |
Finance officials pointed to supply‑chain challenges as a key driver of slippage, noting that global market disruptions make it hard to predict when materials and labour will align to meet construction schedules. The government has been talking about “re‑pacing” capital work for months as part of a broader effort to curb the deficit without cancelling commitments.
As the province moves into the new fiscal year, the interplay between delayed capital work and one‑time revenue gains will be critical for setting up budgets and timelines. Officials say the slippage will be carried into later years and that the government remains committed to delivering projects while seeking to manage costs.
For communities awaiting hospital upgrades, transit expansions or housing projects, the update signals more timing uncertainty even as the overall deficit shows a marked improvement from earlier projections.
— Reporting from Victoria.
