VICTORIA -- Finance Minister Brenda Bailey managed Monday to impose a slightly less-alarming face on this year's budget, thanks to a breathtakingly convenient windfall on the accounting side.
Bailey's quarterly update on provincial finance used the recently finalized settlement with Big Tobacco, B.C.'s share of which is estimated at $3.7 billion over 18 years.
Rather than spread the payments over the 18-year span, the New Democrats are taking the entire amount (discounted to present day dollars) as a one-time payment of $2.7 billion in the current year.
The province is only getting $936 million of the total this year. Indeed, it won't get the final instalment for almost two decades. In the interim, the government will be forced to borrow to close the funding gap, Bailey acknowledged.
Still, the finance minister defended the move, saying "this isn't a magic number out of nowhere."
First, said Bailey, this was a "standard accounting treatment."
Second, she argued that businesses do this kind of thing "all the time," even when accounts are not fully receivable for another 18 years.
Third, she said the decision to book the entire tobacco settlement now was decided at the staff level in the Ministry of Finance, not at the cabinet table.
However, in the past the Finance Ministry has rejected the argument from the independent auditor general that it ought to count the promise of future payments -- from the federal government, for example -- as revenue in the current year.
Note, too, that Alberta treated the tobacco settlement differently, booking only $713 million of a projected $3.1 billion in the current financial year.
Bailey herself discounted using the tobacco settlement in this fashion during debate on her ministry's spending estimates earlier this year.
"You know a one-time settlement isn't going to solve the deficit problem that we're in," she told the house on May 27.
If one accepts the minister's rationale for this handling of the tobacco settlement, it is nevertheless remarkable how little improvement it made in her overall bottom line.
Yes, the tobacco dollars did offset the $2.8 billion revenue hit the government took in phasing out the carbon tax. But even with the $2.7 billion accounting "treatment" -- or "dodge, if you prefer -- the deficit for the year is still projected to be a record $11.6 billion.
The overall portrait on display in Monday's update is of a sluggish economy, slumping resource revenues, and a cooling real estate and housing market. And that is before the Trump tariffs had a chance to work through the economy in the first three months (April-June) of the year.
The decision to book the entire tobacco settlement in a single year precludes being able to use the revenue stream to improve the bottom line in future years.
Next year, the deficit is projected to soar to $12.6 billion, another record. It expected to still be in the fiscal stratosphere at $12.3 billion in 2027-28, before the provincial election scheduled for October 2028.
On the other side of the balance sheet, Bailey claimed progress in reining in spending.
"We've made a commitment to review every dollar being spent to make sure it is serving the needs of British Columbians," she told reporters. "That work is reflected in our initial savings of $300 million this year."
Alas for the minister, the amount barely constitutes a rounding error in a $95 billion budget. She did not provide a breakdown of the reputed savings nor of a claimed 850-person reduction in the public service.
It gets worse.
The total provincial debt for the year is expected to top out at $155 billion, up from $89 billion in John Horgan's last year in office. In just three years, Premier David Eby will have increased the debt by $66 billion.
About half the increase -- $32 billion -- was borrowed to cover spending on the operating side -- staffing, overhead, groceries and the like -- not the capital spending on schools and hospitals that the New Democrats usually cite to justify their debt loading.
Bailey struggled Monday to rationalize the surge in debt and deficits since Horgan left office. She mentioned the COVID-19 pandemic and inflation and the usual suspects in the global economy.
But Horgan managed to guide the province back into surplus territory the year after the pandemic. On retiring three years ago, he left behind a projected budget surplus of almost $6 billion. Eby spent most of it in four months.
In a memoir -- John Horgan In His Own Words -- to be published next month, Horgan lists his fiscal record as one of his proudest achievements.
"With Carole James as finance minister, we chalked up some massive surpluses that allowed us to pay down the provincial debt as well," he wrote. "They weren't because of budget cuts but because of economic growth and strategic tax increases.
"One of the myth-busting things we were able to do was end the narrative that the NDP can't manage money," says Horgan. For a time, he did.
But the NDP's fiscal recklessness is back, no longer a myth. How quickly David Eby threw it all away.