VICTORIA - British Columbia's Liberal government missed its budget target for 2012-2013 by more than $175 million, due primarily to declining resource revenues, but the bottom line numbers could have been worse if the Liberals had not resorted to spending controls halfway through the year, Finance Minister Mike de Jong said Tuesday.
But Opposition New Democrat finance critic Mike Farnworth said the Liberals overshot their deficit target significantly and their spring election promises of a debt-free B.C. have produced a debt spree, with the debt increasing $5.8 billion over the year.
B.C.'s debt ended the year at $55.8 billion and now is estimated to rise to $62.5 billion this year.
De Jong said the final public accounting for last year left a budget deficit of $1.146 billion, up $178 million from the $968 million forecast when the Liberals introduced their budget in February 2012.
De Jong tried to sweeten the final deficit number by reporting that it was forecast to hit $1.45 billion halfway through the year, but belt-tightening on the government side trimmed the final number downwards.
"The deficit, it is, as you see $178 million greater than was projected in the February 2012 budget," he said. "It is, I suppose, happily, less than was projected in the (quarterly) update. "We didn't bring it down to where we had targeted it, but we did bring it down from where it was on target to reach during the fiscal year."
De Jong said said forecasted revenues were down by $1.1 billion, which were partially offset by $668 million of savings in government spending.
The drop in revenue was mostly due to the decline in resource sectors including petroleum, natural gas, natural resources and minerals, he said.
Farnworth said he is concerned about the rising debt, especially since the Liberals promised during the spring election campaign to eliminate the debt.
"We've seen the largest debt increase in the history of British Columbia," he said. "This is a government that ran around during the election campaign saying debt-free B.C."
The Liberals campaigned on a vision of the future that includes aggressive LNG development, which the party said could lead British Columbia out of debt within 15 years.
De Jong said the debt is still within affordability margins for the province because the B.C.'s ratio of debt to gross domestic product comes in at 17 per cent, which is below the 17.6 per cent forecast in the budget.
Quebec's debt-to-GDP ratio is 48 per cent, while it's two per cent in Alberta.
The public accounts indicate B.C. economy grew by 1.7 per cent in 2012, slightly below the national average of 1.8 per cent.
De Jong acknowledged that B.C.'s auditor general Russ Jones disagrees with the government's final budget numbers.
The auditor included an independent report in the public accounts that concludes if B.C.'s budget numbers were calculated using Canadian public sector accounting standards, the B.C. budget would have produced a surplus of $1.75 billion.
Canadian public sector accounting standards set out how governments should report revenues they receive from the federal government, but B.C. defers those payments, Jones said. Ontario and Alberta also defer the payments.
De Jong said the government started to make progress on holding down pay increases for top executives even though total executive compensation was up more than $1 million from last year.
De Jong said the total pay for the top 10 executives dropped by almost three per cent, but the numbers were up because more executives were disclosed as part of the program and more executives received bonuses due to performance improvements.
De Jong also said the deficit numbers mean all cabinet ministers will receive a 10 per cent pay cut as part of the government's balanced budget law.
Note to readers: This is a corrected story. An earlier version said the debt would increase $5.8 million over the year.