VICTORIA - Yes, that is a real $1.2-billion surplus the Liberals are suddenly projecting for this year.
And it makes both the job of governing and their re-election campaign a lot easier.
Finance Minister Gary Collins unveiled the latest financial update Tuesday. Five months into the fiscal year things are going a lot better than he predicted. Instead of a skimpy $100 million surplus - not much in the context of $30 billion in government spending - B.C. is on track for a $1.2-billion surplus.
Things look even better for next year's election budget. The Liberals had been projecting a $275-million surplus. Now Collins is projecting $1.3 billion.
That leaves the Liberals with some enviable choices. They can spend more money, cut taxes or pay down the debt. Or, most likely, do some combination of all three.
It is good news.
Government revenues have are on track to jump about 9.5 per cent over last year. Lumber prices - in part due to a couple of hurricanes in Florida - are nearing record levels, which means both a bigger harvest and higher royalties. Natural gas prices are also high, pushing royalties about $200 million above plan. And low interest rates and a strong economy have pushed up tax revenues.
You can decide how much credit - or blame - any government can take for economic performance. No government policy change can cushion B.C.'s export-based economy from big weakness in our major markets. But the Liberals' tax cuts and move to more business-friendly policies have helped encourage investment in the province.
However before you get too fired up about plans for the money, recognize that even $1 billion isn't all that much in the government scheme of things.
Collins has already set aside $200 million as a cushion in case things take a turn for the worse.
And the Liberals are already under pressure to undo the sales tax increase they imposed in 2002. Knocking the rate back to the original seven per cent - the Liberals raised it to 7.5 per cent - would cost another $280 million.
That leaves $520 million, enough for a 1.7-per-cent overall spending increase. (The Liberals' budget for this year called for a 1.3-per-cent increase, not enough to keep up with population growth or inflation.)
Still, the Liberals can now talk about spending, not cutting. Collins unveiled the background pamphlet for a legislative committee heading out to get input on next year's budget. Should we spend, or cut taxes, or pay down the debt, it asks? How much more for schools, or health care? Those are good questions for a government to be putting before voters.
The Liberal campaign will talk about the shared sacrifice, the tough decisions and the benefits to come, with the larger-than-expected surpluses as the first big example. (And, of course, about the New Democrat's dismal record.)
That still leaves NDP leader Carole James with opportunities. She was quick off the mark in responding to the surplus.
James argued that the Liberals had simply benefited from a strong global economy. And the surpluses had been produced by shifting the tax burden on to middle and lower-income families - a fair charge - and unreasonable spending cuts, she said. Health care and education have been starved of money.
And the issue, says James, is trust. Who do voters trust to make decisions about dealing with the surplus in an effective and equitable way?
That is a pivotal question in the campaign. But there's no way of knowing yet how voters will answer.
James is lugging the NDP's past baggage, her own fiscal plans are still fuzzy and she has no track record.
But trust isn't exactly Campbell's biggest asset either. He's profoundly unpopular, according to the polls, and has already broken trust on BC Rail and other campaign promises.
Both leaders have the next eight months to persuade voters that they can be trusted.
Footnote: The government's numbers look sound, although there always risks froma volatile global economy. GIve the Liberals full credit for consistent openness in setting out the state of the province's finances, and the assumptions underlying them. They have set a high standard for transparency and - aside from a consistent conservative lean in the budgeting - for accurate forecasts.