B.C.'s deficit narrowed to $7.7 billion as spending slipped on capital projects

British Columbia's deficit for the 2025/26 fiscal year came in at $7.7 billion, down from the originally budgeted $10.9 billion shortfall — a $3.2 billion improvement driven largely by a one-time tobacco settlement and delays to major capital projects.

Total provincial spending reached $94.9 billion. Finance Minister Brenda Bailey attributed the narrower deficit partly to what she called "slippage" in the capital spending plan. The province had budgeted $15.4 billion for capital projects but spent just $11.4 billion, leaving $4 billion in unspent funds that will carry over into coming years.

"Slippage happens every year," Bailey said Monday at a press conference in Victoria unveiling the audited financial statements. "It was quite an aggressive capital allotment at $15 billion, and the slippage of $4 billion will in fact carry over into other years."

Bailey blamed some project delays on labour shortages and supply-chain disruptions. The spending gaps included $466 million in lower education costs due to slow project progression, $1.266 billion less in highways and transit spending, and $1.863 billion less in health facilities spending.

The province distinguished "slippage" — unplanned delays — from "repacing," a deliberate decision to slow projects down. "Repacing is a deliberate pulling back of a project and looking at when we can deliver it and how to keep the cost down," Bailey said. "The projects that are experiencing slippage, maybe it's a five-year build and part of the build didn't happen in year two, but will happen in year three."

The $2.561 billion tobacco settlement significantly improved the bottom line. Beyond that windfall, the government pointed to better-than-expected economic growth — GDP grew two per cent, 0.2 per cent higher than forecast — and unemployment at 6.2 per cent, lower than the national average of 6.8 per cent.

This marks the first time since 2017, when the NDP took power, that actual spending has not exceeded the budgetary forecast. Bailey framed it as evidence of improving fiscal management, though B.C. Conservative Finance Critic Peter Milobar called the framing misleading. "For a brief snapshot in time, it might make them feel good," he said, accusing the government of using the settlement to "artificially" depress the deficit numbers. Milobar argued that "repacing" and "slippage" are synonymous with project cancellations and that the government is failing to deliver on promised timelines.