British Columbians are about to find out what it means for a government to balance its budget when money starts to perform a vanishing act.
With less money coming in, it means the government has to cut spending to achieve its balanced budget goal - and it's inevitable some of that reduced spending is going to result in some howls of outrage from those affected the most.
The B.C. Liberals were re-elected almost solely on the issue of economic management, and that included its promise to deliver balanced budgets, year in and year out. But the budget update provided this past week contained some unsettling numbers that underscore how hard it will be to balance the books without creating controversy.
First of all, the forecast for tax revenues has been slashed by more than $200 million. Finance Minister Mike de Jong is balancing his budget on a razor's edge (the projected surplus is now down to a mere $153 million, which is almost a rounding error on a $44 billion budget) so a revenue hit of that magnitude can very quickly wreck the best-laid plans.
Also worrisome for de Jong has to be a decline in the projected performance of some key economic indicators from the budget three months ago. Gross Domestic Product, incomes, corporate profits, retail sales - all are expected to perform worse than was envisioned in February.
On a more positive note, natural gas is making a bit of a comeback. Once a vital contributor to the government's revenue base, natural gas revenues have collapsed in recent years but are now expected to come in more than $100 million higher than was forecast in February.
But, overall, there is little reason for any significant optimism on the revenue side. This brings us to the spending side of the budget, and this is where the public is going to feel the impact.
The B.C. government presents its budget as part of a three year fiscal plan, and the next two years don't look much rosier than the current year (although the 2015/16 budget does contain significantly more breathing room when it comes to achieving a surplus).
On paper, de Jong is looking to chop at least $130 million over the next three years from his budget. On top of that, he is allocating funding increases to the health care system that are a little more than half of what they have been for years.
These moves will undoubtedly impact government services for several years. It's hard to see how wait times in the health-care system will be reduced in any meaningful way, and in fact they may well increase.
The government is also signalling it intends to put the brakes on any increase for physician fees. This could result in a confrontation with doctors, which is the kind of fight governments rarely win.
All in all, the three-year fiscal plan suggests that anyone who relies on government services should not expect an improvement in them any time soon.
In fact, the budget squeeze could result in the elimination of some of those services, or at the very least deterioration in their quality.
And B.C.'s teachers should realize there is no money put aside for wage increases. Any pay hikes will have to come from "savings" found within the education system, a difficult if not impossible task.
But while government programs are being squeezed, frozen or eliminated, the provincial debt will continue to climb.
Capital spending on such things as schools, hospitals, roads, bridges and B.C. Hydro facilities mean the province will rack up a further $7 billion in debt over the next three years.
To give you an indication of how fast the debt is escalating, consider this: the government's debt went up more than $350,000 during de Jong's half-hour budget update presentation last week!
During the election campaign, Premier Christy Clark kept suggesting the province's debt could be wiped out by exporting liquefied natural gas.
But she also talked about balancing the budget.
Her government may never achieve those debt reduction targets, but it's betting the farm it will accomplish the balancing act.
