B.C. faces steep fiscal reckoning with record deficits and rising debt costs ahead of October election

British Columbia is confronting a fiscal crisis that will force difficult choices on the next government. The province is projecting a large deficit for the 2026–27 fiscal year, and debt service costs are climbing sharply. By 2028–29, interest payments on provincial debt will consume nearly 10 per cent of budget revenues — compared to an average of 4.6 per cent over the decade leading up to 2025–26.

Finance Minister Brenda Bailey introduced the 2026–27 budget in February with a base income tax rate increase. The budget also includes 15,000 full-time public sector job cuts over the next three years and construction delays for care homes, student housing, and a cancer centre.

Labour groups have pushed back. Paul Finch, president of the BC General Employees' Union, said the province broke its promise that costs could be controlled by adjusting the management-to-front-line worker ratio. "It's challenging to build an economy on a weakened public foundation," Finch said in a statement. BC Federation of Labour Secretary-Treasurer Hermender Singh Kailley called for transparency on how cuts to front-line service delivery would unfold.

The CCPA, a think tank focused on social and economic justice policy, notes that the swing from relatively balanced budgets over the business cycle to large annual deficits under the Eby government is notable. B.C. is caught up in Canada's trade war with the United States and is experiencing a major downturn in the housing market. Interest rates, historically low over the past quarter-century, appear to be ending, and B.C. credit downgrades are increasing the cost of borrowing for government.

Policymakers and voters face a choice: the deficit pathway entails spending cuts and/or tax increases, each with economic and distributional consequences. Parties running for government in the October 24 election should explain their fiscal choices for Budget 2027.