B.C. budget brings record deficit, billions in trade-war contingencies

VICTORIA — The days leading up to British Columbia Finance Minister Brenda Bailey’s first budget had been a blur, she said, each “blended into the other” as she and her staff tried to keep up with unspooling developments in a potential Canada-U. S. trade war.

Hours after that conflict became a reality on Tuesday, Bailey unveiled a budget that she said defended the province against U.S. President Donald Trump’s “unjustified” tariffs on Canadian goods that risked tens of thousands of jobs and tens of billions in economic losses for B.C.

The budget includes a record deficit that tops $10 billion for the first time, as well as $4 billion in annual contingencies for each of the next three years to cover “unpredictable costs” including tariff responses.

Bailey said the budget was focused on education and health care, while also boosting a “self-sufficient economy.”

She said the U.S. tariffs would come at great cost to B.C. — but now was not the time to retreat by cutting spending on public services.

“While our economy is built to withstand this threat better than most provinces, the impact would still be severe,” Bailey said in a speech to the legislature.

The extraordinary backdrop to Bailey’s inaugural financial platform was underscored when Premier David Eby delivered a pre-budget address to media, government staff and stakeholders at the Victoria Conference Centre.

He said “all bets are off” in the economic conflict with Canada’s biggest trading partner.

“We have no choice but to respond in kind to the United States,” Eby said, standing in front a screen emblazoned with “buyBC” logos.

Eby said the budget came in the context of a “massive shift in global politics,” citing Trump’s decision to freeze military funding for Ukraine, an event he called “deeply disturbing.”

“We will meet this moment with dignity, with courage, resolute in our willingness to stand up for what we believe in,” he said, adding “we will fight and we will win.”

Government-run B.C. liquor stores would no longer sell products from Republican U.S. states, he said.

Despite the peril posed by the trade war, Bailey said core services would not be cut, even if there were no “splashy” expenditures this year.

The budget includes $4.2 billion over three years to increase capacity in the health system, and a further $15.5 billion for capital investments in hospitals and other facilities over the same period.

“We will manage our finances carefully so we can continue our work to improve health care, education and other core services, without adding fees or hiking costs,” she said.

The budget predicts a record deficit of about $10.9 billion in the next fiscal year starting April 1, up from a revised forecast of $9.1 billion this year.

The province’s rising deficit has previously been eyed skeptically by ratings agencies, with S&P Global Ratings dropping B.C.’s credit score last April for the third time since 2021. Another agency, Moody’s, maintained the province’s long-standing AAA credit rating but revised its outlook to negative.

In updated forecasts provided with the budget on Tuesday, the Finance Ministry said the trade war with the United States could cost B.C. $43 billion in cumulative GDP losses and 45,000 jobs by 2029.

B.C.’s annual revenue losses could reach as much as $3.4 billion, a sum Bailey said was more than the budgets for most provincial ministries with the exception of health, education and social services.

Corporate profits could tumble by as much as $5 billion per year, the forecasts show.

“When faced with big challenges, there are those who might say we should retreat and respond by cutting spending on the public services that people rely on,” Bailey said.

“But we know that this would only weaken the services we all need and drive up costs for people when they can least afford it.”

B.C. Conservative finance critic Peter Milobar said after the budget was presented that there was nothing that countered the tariff response for meaningful programs or supports or even possibilities.

“When the minister talks about $4 billion in contingencies, including supports for impacts of tariffs, I’d be remiss if I didn’t point out that last year’s budget projected a $3.88 billion contingency fund in this year’s budget. That means $112 million extra is in this budget than what they were already planning on budgeting last year. Hardly an aggressive response to potential impacts of tariffs.”

Rob Botterell, the BC Green Party’s finance critic, told reporters that Bailey has a tough job in these extraordinary times and that he will vote in favour of the budget in accordance with the confidence agreement the two Green members signed with the NDP.

He pointed out, however, that the province’s systemic issues, such as the need to increase innovation and reduce poverty, still need to be tackled.

“This is a standstill budget. It’s not a stand-strong budget,” Botterell said.

The Greater Vancouver Board of Trade gave the budget a letter grade of C- and expanded its report card to give the Trump tariffs a letter grade of F.

Board CEO Bridgitte Anderson says the multibillion-dollar deficit left the government little room to respond to the unjustified tariffs.

“Budget 2025 includes another record-high deficit, as we spent our fiscal advantage, with overall debt projected to balloon by $75 billion by 2028. While the government has talked openly about the need to grow the economy and attract private sector investment, we await the transition from words to action.”

Fiona Famulak, the CEO of the BC Chamber of Commerce said the budget was sobering for both business and B.C. residents.

“It does not deliver the economic incentives, tax changes, programs or policy shifts that are required to kick-start our economy and which we have been advocating for since before the last election,” she said.

Trump’s manoeuvres had already forced the government to backtrack on some spending. It cancelled its election promise of a $1,000 grocery rebate and froze some public-sector hiring as it prepared for the trade war.

The budget includes a $110 ICBC rebate to drivers, the fourth rebate since the introduction of the insurer’s so-called “enhanced care model” was introduced in May 2021. Basic insurance rates will be unchanged until March 31, 2026.

Burnaby Resident Grant Hsu said that while he was aware the government had cancelled the promised grocery rebate, he was holding out hope it might still be in the budget.

“I believe all British Columbians are keen to show solidarity with Canada amid the trade war by buying more Canadian products and supporting the Canadian economy, and many households still need financial support to weather through these uncertainties,” said Hsu who makes his living posting on YouTube.

Hsu said he’s been watching the situation around the B.C. budget closely.

“Most citizens like me care about the support for B.C. families, but I didn’t see much in today’s budget.”

— With files from Chuck Chiang in Victoria and Nono Shen in Vancouver

This report by The Canadian Press was first published March 4, 2025.

Marcy Nicholson, The Canadian Press