B.C. expecting $12.5B deficit due to coronavirus

VICTORIA (NEWS 1130) – It’s a dire situation for British Columbia’s fiscal state. New figures show the province is spending more money on the COVID-19 pandemic with less coming in, potentially pushing the deficit to just more than $12.5 billion.

This comes as the province earmarks billions more for COVID-19 relief measures, with fewer dollars being spent by British Columbians, and fewer tax dollars being collected amid the health crisis.

“The projected numbers are staggering but they’re not without hope,” Finance Minister Carole James says. “Things are getting better each and every day when we follow the provincial health officer’s advice. And today’s fiscal update, though certainly far from Budget 2020 and the surplus that we tabled before the pandemic, provides us an opportunity to build a stronger B.C. that works for everyone in our province.”

BREAKING: BC projecting 12.5 billion dollar deficit for 20/21 – a massive leap from the quarter billion surplus projected just weeks before the pandemic hit the province.#bcpoli #covid19 @NEWS1130 pic.twitter.com/z7p5qVGjgS

— LizaYuzda (@LizaYuzda) July 14, 2020

The forecasted deficit is a world away from the $227 million surplus the province had projected before the coronavirus outbreak hit the country.

“B.C. was fortunate to come into COVID-19 from a place of economic strength. We have a diverse, resilient economy and we started 2020 with zero operating debt, AAA credit ratings, and one of the lowest unemployment rates in the country,” James says, adding it’s due to B.C.’s “strength” that the province was able to mobilize support for British Columbians and businesses.

Record job losses hit B.C. hard, but recovery evident

However, the unemployment rate has hit the highest point since 1987.

New data released by James on Tuesday also shows there has been an uptick in the number of jobs in the utilities, science, and tech industries.

James says there were 235,100 fewer jobs in B.C. in June compared to February.

“And while the job losses in March and April were record breaking, the figures for May and June, in fact, have seen some recovery of the losses we experienced in the previous two months as the economy has started to reopen,” she explains. “The unemployment rate in British Columbia decreased to 13 per cent in June from 13.4 per cent in May as more people started to work again and as restrictions start to ease.”

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While job losses have been widespread, James says “there is no question that COVID-19 impacts British Columbians unequally,” adding it discriminates based on age, gender, income level, and the sector a person works in.

The hospitality, retail, recreation, and trade sectors have been hardest hit by the COVID-19 pandemic.

“Hardest hit? Youth and young adults, and this is in large part due to the fact that they’re over-represented, of course, in restaurant and retail services,” James explains, adding women have also been disproportionately impacted by job losses.

Fin Min @carolejames: May/June have seen some recovery when it come jobs. A bit of improvement in unemployment in June to 13% from 13.4 in May. Youth and women hardest hit as service sector hit hardest 120,000 women, 70,000 youth jobs lost.#bcpoli #covid19 @NEWS1130 pic.twitter.com/snS9pu68Db

— LizaYuzda (@LizaYuzda) July 14, 2020

Meanwhile, housing has also taken a hit over the past four months. While prices are relatively flat, sales are down about 40 per cent.

A mix for the housing sector. While prices are relatively flat, sales are down about 40 per cent. pic.twitter.com/Ww1Z2TKu9J

— Lasia Kretzel (@rhymeswpretzel) July 14, 2020

British Columbians have yet to see the plan for the $1.5 billion the province has set aside for COVID-19 recovery, with government consultation ending on that next week. It will then take a few more weeks to compile the data and formalize a plan, which is expected to be laid out in full this September.

James has said predicting how long it will take for B.C. to recover from the devastating economic impacts of the coronavirus crisis is near impossible, adding it’ll depend on a number of factors.

She said a possible second wave or shifts in other jurisdictions that would affect B.C. exports mean the timeline for economic recovery is uncertain.