British Columbia: Budget 2026

Highlights

• British Columbia’s (BC’s) Budget 2026 came with a mix of good and bad news. Starting with the deficit, the near-term numbers improved considerably relative to those in the Pacific Province’s Budget 2025 and more recent fall forecasts (graph 1). The deficit is on track to hit $9.6B this year, meaningfully below recent estimates. However, the annual fiscal shortfall looks likely to be larger than previously projected over the medium term, starting with a $13.3B deficit in the 2026–27 fiscal year (FY2027), equivalent to 2.9% of GDP. Table 1 summarizes the province’s updated fiscal forecasts.
• Looking under the hood, modest tax increases and a broadly improved outlook for the level of nominal GDP—the broadest measure of the tax base—helped to support a generally improved forecast for own-source revenues. An upwardly revised outlook for federal transfers didn’t hurt either. Of course, this tailwind is tempered by the usual prudence baked into the economic and natural gas price forecasts.
• But along with the modestly better projection for revenues is a similarly augmented outlook for program spending. Motivated by higher planned outlays for health care and education, any revenue tailwind was largely used to support public programs. On top of that, the Budget 2026 expense forecast includes contingencies of $5B in each year of the fiscal plan.
• Due to the modest deterioration in the outlook for the average deficit over the next few years, the debt-to-GDP ratio looks a lot like what was published previously, rising gradually over the outlook. That said, it is anticipated to remain below Ontario and Quebec's ratios over the medium term. Debt charges as a share of revenues may not be so fortunate, however.
• At $37.7B over the three-year horizon, total planned capital spending is $8.2B lower than Budget 2025, with the provincial government keeping an eye on fiscal sustainability. Borrowing requirements have been revised upward to $34.9B in FY2027 compared to the previous forecast of $33.1B in the last budget. For FY2028 and FY2029, the province expects to borrow $35.0B and $30.3B, respectively.