Thursday, September 10, 2009

Deficit Daydream Believer

B.C.'s deficit is spiraling out of control, but not because of what the government wants you to believe. Although the finance minister claims the return to deficit spending is because of a huge fall in revenue, a closer look at the books shows it is actually because of a huge increase in spending.

B.C.'s new budget, released on September 1, shows the deficit spiraling to $2.8 billion in 2009-10. B.C.'s finance minister said this is because "we are facing a loss of $2 billion in expected revenues in the current fiscal year." How interesting it is, then, to look at the B.C. budget and see expected revenues falling by only $720 million in the current fiscal year. Darn those pesky numbers.

So if revenues aren't down by as much as the government says, just what is sending B.C.'s deficit to new heights? Out of control spending. Government spending has skyrocketed to $40 billion in 2009, up $2 billion from 2008. If the government had held spending at 2008 levels, the deficit would have been $642 million, not all that much more than the original estimate. So the massive $2.8 billion deficit is a result of a spending blow out, not falling revenue.

Dropping the fiscal fantasy shows the B.C. government has a spending problem, not a revenue problem. If we care about the well-being of our children and grandchildren and want to leave them with something other than a legacy of debt and higher taxes, we need to turn the direction of government spending around, get rid of the deficit, and start reducing the debt.

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