BC Budget 2025: Record $10.9B Deficit Raises Concerns Over Debt and Spending

(Image courtesy CBC)

The British Columbia government has tabled its 2025-26 budget with a record $10.9 billion deficit, citing the need to maintain essential services while responding to economic uncertainty, including US tariffs.

Finance Minister Brenda Bailey defended the spending plan, emphasizing the government's commitment to healthcare, infrastructure, and housing while bracing for the potential economic fallout from American trade restrictions. However, critics warn that the province’s growing debt load, projected to surpass $209 billion by 2027, could further place long-term fiscal stability at risk.

While the budget includes $95 billion in spending, BC’s projected revenues sit at $84 billion, leading to a deepening fiscal shortfall. The province forecasts a declining but persistent deficit, with $10.2 billion in 2026-27 and $9.8 billion in 2027-28.

Tariffs, Debt, and Economic Outlook

The budget assumes 10 percent tariffs on Canadian energy exports and 25 percent duties on all other goods imposed by the administration of US President Donald Trump. The province estimates these tariffs could cut between $1.4 billion and $3.4 billion in annual revenue and reduce real GDP by $43 billion cumulatively by 2029.

Despite these economic headwinds, the budget maintains real GDP growth projections at 1.8 percent in 2025, a figure some economists argue is overly optimistic given the trade war's potential impact.

“The government is spending as if everything is fine when the reality is, British Columbia is on the brink of a recession,” said Chris Gardner, CEO of the Independent Contractors and Businesses Association. “This budget was out of date before it was even printed.”

Opposition critics say the deficit cannot be blamed entirely on tariffs. BC Conservative finance critic Peter Milobar accused the NDP government of years of fiscal mismanagement, claiming the province’s financial troubles were self-inflicted.

Healthcare, Infrastructure, and Social Services Spending

Despite the mounting deficit, the government is prioritizing spending in healthcare, education, and housing.

The budget commits:

• $5.1 billion for new and upgraded hospitals, including St. Paul’s Hospital in Vancouver and Royal Columbian Hospital in New Westminster.

• $1.4 billion for healthcare services, including primary care, emergency wait-time reductions, and hiring more healthcare workers.

• $1.5 billion to upgrade schools, including $392 million for prefabricated classrooms to address overcrowding in rapidly growing districts.

However, some previously promised projects are not included in major funding announcements. The budget does not outline specific new funding for the Nanaimo and Langley hospital towers, mental health counsellors in every school, or a low-interest financing plan for first-time home buyers.

BC Nurses’ Union President Adriane Gear expressed concerns over staffing shortages, saying the budget does not address how the government will find enough nurses to staff new facilities.

“My concern is, I’m not sure where we’re going to get the nurses from,” she told City News. “It would have been good to see some operational investments, as opposed to just investments in infrastructure.”

Housing Affordability and ICBC Rebates

Recognizing BC’s ongoing housing crisis, the budget allocates an additional $318 million over three years to the BC Builds program, aiming to deliver thousands of rental homes for middle-income earners.

To discourage speculation, the province is increasing its Speculation and Vacancy Tax to three percent for foreign owners and one percent for Canadians, a move expected to generate an additional $47 million annually by 2027.

Public Safety and Crime Prevention

Public safety funding sees a notable increase, with $325 million over three years to support justice programs and law enforcement initiatives.

Surrey Mayor Brenda Locke, however, criticized the budget for failing to allocate funding for her rapidly growing city.

“Our residents deserve equitable support from the provincial government,” she said. “We see clear evidence that Surrey is not receiving its fair share of funding for transportation, education, healthcare, and social infrastructure.”

Debt and Credit Rating Concerns

The province’s debt is expected to rise from $133 billion to $209 billion by 2027, with the debt-to-GDP ratio jumping from 23 percent to 34 percent over the same period.

Carson Binda, BC director of the Canadian Taxpayers Federation, called the budget a “disaster,” raising concerns about potential credit rating pressures.

The Greater Vancouver Board of Trade assigned the budget a C- grade, citing a lack of economic vision, increasing debt, and limited business tax relief.

Bailey did not provide a timeline for balancing the budget, instead pointing to economic uncertainty and the need to sustain public services.

“The uncertainty makes it difficult for the Province to predict the precise impact of tariffs, as well as what measures may be required to help people and businesses,” the budget states.