Bad news budget

The main news from the budget is that life in B.C. is going to be worse for most people over the next several years.
For all our crabbing about government, it provides useful services for individuals and communities.
And this week’s budget sets the stages for cuts in almost every aspect of government services, from environment to health care to schools.
The Liberal government is sticking with its September commitment to balance the budget by 2013-14. That means tight controls on spending.
More than half the ministries - that’s 11 of 20 - are projected to spend less in 2012 than they did in the fiscal year that is just ending.
In many cases the cuts are deep. The aboriginal relations budget, for example, is to fall from $67 million to $37 million. (The money for reaching treaties has been cut by 80 per cent.) The forest ministry budget is cut from $1 billion this year to $606 million.
Some changes are understandable. The government sees no significant recovery for forestry, so the ministry is likely to shrink.
The cuts aren’t just in those areas. Finance Minister Colin Hansen said the budget aimed to support children and families.
The children and families ministry gets a 1.2-per-cent increase this year and then faces a funding freeze for the next two years, despite inflation, population growth and growing demand.
Funding for universities and colleges is effectively frozen for the next three years.
Even health care faces a continued squeeze. Funding for health regions will go up 4.3 per cent in the 2010 budget, which is significant.
But it’s also a lower increase than the health authorities received this year, which resulted in cancelled surgeries and reduced care.
The education budget increased 2.8 per cent, to cover the costs of introducing kindergarten. But the extra money - $140 million - is less than half the shortfall school districts across the province are reporting. And the per-pupil grant will only rise 1.3 per cent this year.
The bottom line is that government will be doing much less. In theory, people often like the idea. But when their children sit in crowded classes or their community’s water supply is contaminated, they aren’t quite so keen.
Especially when they are paying more. There were no tax surprises in the budget.
But the harmonized sales tax is coming, which will mean about $270 in increased sales taxes for a middle-income family of four. MSP premiums are increasing by $84 a year for most families. And B.C. Hydro rates are forecast to jump an average eight per cent a year.
The government did face real pressures. The global economic meltdown reduced its revenues sharply. Maintaining services would mean either higher taxes or deficits for a longer period. (The federal government has opted for the second approach.)
But the Liberals - who vowed never to run deficits - have opted instead for reduced services as part of a short-term effort.
Overall, the budget is counting on healthy revenue recovery - 5.8 per cent this year - and program spending increases are to be held to less than half that amount.
The impact will be significant, and not just in services. The plan calls for the elimination of about government 4,000 jobs, or about 10 per cent of the workforce. (The government is also attempting to freeze wages for the next three years as contracts expire.)
And the news isn’t good for anyone already looking for work. The government predicts it will take two years for employment to grow to the level it was at the beginning of 2009.
The budget reflects short-term thinking. The goal is to eliminate the deficits as soon as possible, accepting reduced services. That reduces future debt, but as the government points out in the budget documents, B.C.’s debt is manageable.
And it reflects some wishful thinking as well. The return to balanced budgets, for example, counts on limiting the health spending increase in the final year of the plan to 2.9 per cent. That’s highly unlikely.
It’s going to be a tough three years, especially for those who need government services that just aren’t there.
Footnote: The hokiest part of the budget was the announcement that HST revenue would be dedicated to health care. It’s an obvious attempt at phoney spin; all the money flows into general government coffers and is allocated as the politicians choose.