Finance Minister Carole James has ordered all government ministries to start cutting their discretionary spending, in an attempt to put aside contingency funds that can keep the budget balanced during a time of economic uncertainty.
James told Postmedia News on Thursday that ministers have been asked to begin “examining their discretionary spending in budgets to look for savings that can then be put into contingencies.” That includes travel, consulting contracts and office expenses, she said.
The goal is to recover $300 million that James has already used this year to keep the budget balanced as the housing market cools, revenues dwindle, economic growth slows and global financial risks mount.
“We’re talking about less than one per cent of the total budget and if we’re able to find those kind of savings that’s what we’re aiming for,” she said. “That’s just providing us with the cushion.”
The money could also be used to fund programs and unexpected issues that might need money during the year, she said.
James denied rumours that came out of the Union of B.C. Municipalities meetings in Vancouver that ministers were being asked to cut their budgets by five per cent.
“It isn’t true,” she said.
However, the government must be prudent and cautious in how it is spending money that is not critical to programs and services, James said.
“I do believe as the responsibility and the responsible thing to do as finance minister to make sure we’re putting resources aside that can be used for the challenges that come up for the people of British Columbia.”
The caution builds off James’ first quarter financial results delivered Sept. 11, in which the projected surplus shrunk to $179 million from $274 million due to revenue losses. The budget would have dipped into deficit if James had not transferred $300 million out of the $750-million contingency fund.
James warned that her economic growth forecast has dropped from 2.4 per cent growth in February to 1.7 per cent in September.
The 2019-20 budget still has a $500-million forecast allowance, and $450 million in contingencies. If ministers are able to find $300 million in additional savings, B.C.’s total emergency spending would increase back to $1.25 billion this year on a $58-billion spending plan.
