It turns out the B.C. government's deficit for last year was not as bad as expected.
The province's audited public accounts for the 2024/25 fiscal year were released on Thursday, Aug. 7, and show that the deficit ended up lower than the latest forecast by about $1.8 billion.
The 2024/25 budget had initially estimated the province would be in the hole by about $7.9 billion. This estimate was revised upward several times, eventually ending up in March with a third-quarter forecast of roughly $9.1 billion.
But, according to an audit of actual spending, the province ended the fiscal year with a deficit of approximately $7.35 billion, having spent a total of nearly $91.4 billion.
Part of the reason for the deficit adjustment is that total revenue was about $2.5 billion higher than expected. This was primarily due to increases in tax revenue and extra earnings from ICBC.
The financial boost was hampered by declining natural resource revenue, which was down by $727 million, largely as a result of lower prices for natural gas, coal and oil.
Had spending not also increased by more than $1.9 billion, the deficit would have decreased even more. Finance Minister Brenda Bailey blamed extra costs related to fighting wildfires.
Despite the positive results, Bailey cautioned that the province still needs to increase revenue even further to overcome expected financial challenges resulting from the trade war with the United States.
"Let's be clear, it's a $7.3 billion deficit, and I take that very seriously," she said. "We have a lot of work to do ahead of us to get back to a path to balance, and that's the work that we're engaged in now, our efficiency review, the cross-government review of programs and ensuring that we're working with each ministry to find opportunities to reduce spending."
This deficit is still $2.5 billion higher than the previous year, when the government spent roughly $5 billion more than it brought in.
The province's total debt is now almost $133.9 billion, which is $10 billion more than estimated in the budget and a year-over-year increase of $26.4 billion. About $99 billion of that is taxpayer-supported debt, while the rest is self-supported by Crown corporations and other agencies.
Debt was higher than projected because the government decided to take advantage of favourable rates and borrow more money than planned to pay for future expenses, Bailey said.
Opposition decries increasing operating debt
B.C. Conservative Finance critic Peter Milobar highlighted the slice of government debt resulting solely from operating budgets. This has gone from zero in 2022, when Premier David Eby took over from John Horgan, to 24.5 billion in 2025. Milobar called this "very concerning."
"It's not debt that would be paying for bridges or hospitals or schools," he told Black Press Media. "It's debt that is literally paying for staff and the light bill at schools."
Milobar put this in the context of current shortcomings in the province's health-care and educational systems.
"I guess if they were exceeding their expenditure budget, getting better results for it, people might understand," he said.
Milobar also questioned Bailey's assessment of why spending increased, pointing out that it wasn't just wildfires 鈥� health-care and education expenses were up as well.
Looking ahead
Bailey is scheduled to present the first quarterly report on the current year's budget on Sept. 15. Her ministry previously projected that the impact of U.S. tariffs on B.C.'s economy would be severe, and she did not change her tune on Thursday.
"We do know that tariffs are having an impact on our economy, and we're seeing that reflected in a number of different ways," she said. Bailey said she would reveal more on Sept. 15, including the impact of the removal of the consumer carbon tax.
In November, the premier had instructed each ministry to undertake efficiency reviews to trim spending in response to increasing deficits. This work is ongoing, with initial cuts focused on travel and contractors. A deeper look at programmatic spending is now underway.
"Ensuring that every dollar being spent is reaching the outcomes it was designed to reach and pulling back dollars that aren't meeting that criteria," Bailey said.
Over the past three years, provincial debt has increased by roughly 45 per cent, and these efficiency reviews are part of the effort to stem that tide.
But Milobar sees the warning signs flashing red because this debt increase happened while revenues continued to rise. He is concerned about what happens should the tariff impact become more severe.
"In this case, they're collecting record revenues and yet still having to run record operating debt," he said.
This is why he does not want to give the government a pass on Sept. 15 if the future financial picture darkens.
"We have to be cautious, so we don't just give the government a free pass on that," he said. "The budget that they presented had not accounted for tariffs in it, and had already shown us hemorrhaging money like crazy."
