B.C. Finance Minister Brenda Bailey handed down a spending plan Tuesday that was pre-billed as an austerity budget but which, by her own admission, is nothing of the sort.
It’s a tax-and-spend plan that continues systemic deficit spending and public debt.
And while it forecasts increased revenue from natural gas and mining, those revenues are such a small portion of the government’s overall revenue needs, it will not make a significant dent in the deficit.
The Eby government will continue to spend beyond its means at a time when B.C.’s population is declining, productivity is falling, unemployment is rising (to 6.2%) and Canadian exporters continue to face U.S. trade barriers.
Debt, deficits and GDP
Rather than reduce spending to address its deficit, the Eby government is opting to raise taxes, including income and property taxes, and apply the PST to services that were heretofore exempt.
Despite some measures to decrease the size of government, the B.C. government plans to spend $4.1 billion more in 2026-27 than it takes in, which will bring the deficit to an estimated $13.3 billion.
There is no plan to eliminate the deficit. It is expected to remain roughly $11 billion for the remainder of this decade.
Total taxpayer-supported debt is $116.5 billion, which is expected to rise to $189 billion by 2028.
When self-supported debt is included (i.e. Crown corporations like BC Hydro), B.C.’s total debt is expected to climb from $154 billion in 2026 to $235.5 billion in 2028.
B.C.’s economic growth is expected to remain comparatively tepid in 2016 at 1.3% and 1.8% in 2027.
A bloated public sector
Whereas the Christy Clark Liberal government grew private sector jobs in B.C., the Eby government has grown public sector jobs.
Plans to address government bloat are meagre, with a workforce reduction target of 15,000 full-time equivalent jobs over three years, largely through attrition and early retirement.
The government hopes to shave $2.8 billion from its spending through workforce reductions and streamlining of government services over three years.
Tax hikes coming
The budget will increase B.C. income taxes by raising the tax rate in the first income tax bracket from the current 5% to 5.6%. The increase for the average British Columbian will be $76 in 2026.
School taxes on properties valued at $3 million to $4 million will increase from 2% to 3%, and from 4% to 6% on properties valued at more than $4 million.
The PST will also be expanded to include professional services, including: architectural, geoscience, engineering, security, accounting, bookkeeping and commercial real estate services.
The speculation and vacancy tax will increase to 4%.
Gas and minerals strong, forestry weak
Thanks to B.C.’s nascent LNG and propane exports industry, the budget anticipates natural gas royalties to increase from $942 million in 2025-26 to $1.3 billion in 2026-27 and $1.6 billion in 2028-29.
That forecast is premised on natural gas prices increasing from $2.18 per gigajoule (GJ) in 2026 to $2.48 per GJ by 2028.
At a budget-lockup press briefing, Bailey said budget 2026 does not yet fully reflect the economic benefits expected from LNG exports. Only one of several LNG exports projects being built is in operation yet — LNG Canada.
“Those projects are moving forward — they’re not yet reflected in the budget, “she said. “But they are coming, and they’re going to make a significant difference for us.”
Revenues from minerals and mining are expected to increase 32.6% in 2026-27, from $144 million to $191 million.
In total, revenue from mining, oil and gas and electricity sales totaled $1.6 billion in 2025-26, and is forecast to rise to $1.9 billion in 2026-27, and $2.4 billion in 2028-29.
Forestry revenue is expected to increase 3.3% but that is mainly due to higher stumpage rates.
B.C.’s forestry sector has been devastated by lack of fibre, lower lumber prices, and American duties and tariffs. They have driven major mill closures over the past couple of years.
Despite Premier David Eby’s promise a year ago to try to get the annual timber harvest up 45 million cubic metres annually, the budget forecasts the annual harvest from Crown land to average only 29 million cubic metres annually over the three-year forecast period.
In other words, not even the Ministry of Finance appears to believe David Eby’s plans to increase B.C. timber harvest levels.
In total, revenue from oil and gas and minerals and mining is projected to increase from $1.6 billion in 2025-26 to $1.9 billion next year, and as high as $2.3 billion by 2028-29.
But more than half a billion dollars in forestry and mining revenue over four years will not be going into provincial government coffers, but rather to First Nations.
Through things like revenue sharing agreements, First Nations will receive $293 million from forestry revenue, and $272 million from mining and minerals over a four-year period.
Exports to U.S. down, up for China
External trade barriers, like U.S. tariffs, and commodity prices had negative impacts on some key B.C. commodity exports in 2025.
Overall, there was a 21.2% drop in metallurgical coal exports, a 9.7% in pulp exports, and 6.3% in lumber exports.
Lumber exports to the U.S. alone were down 10.3%, and electricity exports were down 28.2%.
Exports for natural gas, on the other hand, were up 26.9% and copper ore and concentrates were up 23.5%.
Exports of copper to China were up 66.4%, and “other energy products” were up 362.4%.
Those “other” energy products include butane, pentanes and condensate, which are produced in Northeastern B.C.
Supports for manufacturing, forestry
To support manufacturing, which in B.C. includes sawmills and other wood product manufacturing, the budget introduces a new, temporary 15% tax credit for investments in new buildings, machinery and equipment.
The budget also provides temporary relief to forest tenure holders, with a one-year stumpage deferral program, effective Jan. 1 to Nov. 30, 2026.
Other government supports for the resource sector and manufacturing include:
- $283 million for skilled trades training, including $12 million for an employer training grant to help double apprenticeships;
- a new $400 million “strategic investment fund” will be used to support federally designated major projects through direct investments, equity and loans; and
- $40 million over three years to streamline permitting in the resource and tourism sectors.
Nelson Bennett’s column appears weekly at Resource Works News. Contact him at [email protected].
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