B.C. government's budget deficit soars to new all-time high of $13.3 billion | Daily Hive

B.C. government's budget deficit to soar to new all-time historic high of $13.3 billion

Premier David Eby during the 2026 B.C. budget announcement on Feb. 17, 2026. (Government of BC)

The Government of British Columbia’s updated estimate for its operating budget deficit over the previous 2025/2026 fiscal year is $9.61 billion, which is about $2 billion lower than the previous update provided in September 2025 of $11.6 billion.

But the projected deficit for the 2026/2027 fiscal year is expected to reach a new all-time historic record, soaring by nearly 40 per cent year-over-year to $13.3 billion on an operating budget of $98.83 billion, according to today’s announcement of the 2026 B.C. budget. This is the result of a combination of lower increases in revenues that do not match an increase in spending, which is up from the 2025/2026 operating budget of $94.7 billion.

There will be comparatively lower, but still staggering, operating budget deficits over the next two fiscal cycles, reaching $12.17 billion from a $100.7 billion operating budget in 2027/2028 — the first-time ever the B.C. government’s annual operating budget will reach and exceed $100 billion — and $11.44 billion from a $103.2 billion operating budget in 2028/2029.

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The provincial government maintains that this is not an austerity budget, with no new major spending on new initiatives, but an increase in core areas and services seeing pressures.

This includes $5.1 billion in increased spending over the next three years in the core services of health care, mental health and addictions care, elementary and secondary school education, and childcare, $758 million for expanded skilled trades training, and $139 million to increase public safety measures relating to justice and court operations, repeat violent offending and chronic property offending interventions, special investigation and targeted enforcement programs, and community safety programs.

Collective agreements with unions, providing major increases in compensation packages for many public sector workers, are also a growing cost pressure.

Historically, the single largest operating budget line item has always been health care, and this cost has grown substantially in recent years, with pandemic-time increased spending becoming an entrenched structural operating cost, along with increased labour costs related to filling major vacancies across the system.

Since 2017, the number of doctors has jumped by 31 per cent, nurses went up by 23 per cent, and allied health-care workers increased by 33 per cent, with much of this growth occurring since 2022. All the while, over the past decade, B.C.’s population increased by 15.5 per cent, with a rapidly aging demographic also adding to the pressures for expanded care and specialized treatment and services.

In 2026/2027, health-care operating costs are projected to reach $36.1 billion or 37 per cent of the overall provincial budget — up from $35.02 billion in 2025/2026. This will further increase to $37.24 billion in 2026/2027 and $38.4 billion in 2027/2028, when it accounts for more than 37 per cent of the overall provincial operating budget.

Education and child care are the next largest spending item, rising from $9.78 billion in 2025/2026 to $10.07 billion in 2026/2027 and $10.14 billion in 2027/2028, before stabilizing at $10.13 billion in 2028/2029.

The provincial government is hoping to increase its overall taxation revenue over the coming years from $49.2 billion in 2025/2026 to $50.78 billion in 2026/2027, $54.04 billion in 2027/2028, and $56.48 billion in 2028/2029.

This taxation revenue increase is expected to come from a combination of organic improvements to the economic situation over time, as well as changes in the provincial government’s inputs, including an expansion of applicable PST and increases to the School Tax and personal income.

Natural resources royalties are projected to increase by about $1 billion over the next three fiscal years from $2.56 billion in 2025/2026 to $3.55 billion by 2028/2029, with natural gas royalties leading the increase.

With continued major operating budget deficits and a heightened capital budget on the construction of new facilities and infrastructure, provincial debt will jump from $154 billion in 2025/2026 to $183.4 billion in 2026/2027, $209.9 billion in 2027/2028, and $234.6 billion in 2028/2029.

The provincial government’s budget notes that it will pace out some of the major capital projects, spreading out some of the costs over a longer timeline to reduce the strain on its finances. This especially relates to some projects to build new and improved hospital facilities.

Total capital spending will reach $17.07 billion in 2025/2026, $18.68 billion in 2026/2027, $18.17 billion in 2027/2028, and $16.08 billion in 2028/2029. The proportion of taxpayer-supported capital spending will gradually decrease from 2026/2027 ($13.66 billion in taxpayer-supported capital spending and $5.01 billion in self-supported capital spending) to 2028/2029 ($10.89 billion in taxpayer-supported capital spending and $5.19 billion in self-supported capital spending).

The debt-to-GDP ratio will increase from 26.1 per cent in 2025/2026 to 30.6 per cent in 2026/2027, 34.4 per cent in 2027/2028, and 37.4 per cent in 2028/2029.

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