Deficit forecast climbing in B.C.

B.C. freezing management salaries in government, Crown corporations and agencies, and imposing a hiring freeze on direct government jobs

The B.C. government is freezing management salaries in government, Crown corporations and agencies, and imposing a hiring freeze on direct government jobs to deal with a rising deficit forecast.

Finance Minister Mike de Jong delivered his first quarterly financial update Thursday, showing a deficit forecast up $173 million. That would bring the deficit to $1.14 billion by the end of the fiscal year next March, due mainly to lost revenues from falling natural gas prices.

The hiring freeze doesn’t apply to health authorities, universities and other services beyond direct government staff, which is budgeted to shrink by 2,000 positions through attrition in the next three years.

The pay freeze doesn’t apply to unionized positions, but de Jong said B.C.’s bargaining mandate for unions is also being reviewed.

The current mandate calls for wage increases to be financed by savings in other parts of unionized operations.

It has so far not produced a settlement with the biggest union representing direct provincial employees, the B.C. Government and Service Employees’ Union, which has staged a series of one-day strikes since rejecting a 3.5 per cent wage increase over two years.

De Jong said he intends to present a balanced budget in February for the 2013-14 fiscal year, when the government will face a May election. To do that, the government has to make up for an expected $389 million drop in natural gas revenue that year.

The government uses gas price forecasts from five private sector agencies, but none fully accounted for the surge of shale gas production that has depressed North American prices. B.C. producers have ramped up despite the softening price, to prove reserves needed for liquefied natural gas export facilities proposed for the north coast.

NDP finance critic Bruce Ralston said he predicted the gas price drop last spring, but former finance minister Kevin Falcon ignored him. And Ralston scoffed at de Jong’s claim that his ministry will find more savings in travel budgets and other discretionary spending.

“Travel budgets? That’s an old movie,” he said.

De Jong said a fall legislative session is “unlikely” as he and other ministers appointed in Premier Christy Clark’s Sept. 5 cabinet shuffle learn their new jobs and work on balancing the budget.