British Columbia’s finances ended the 2025-2026 fiscal year in better shape than the government had expected but the improvement does not erase the financial pressures building underneath the province’s books.
The province recorded a $7.7 billion deficit for the year ending in March, according to Finance Minister Brenda Bailey. That is $3.3 billion lower than the $10.9 billion deficit forecast when the 2025-2026 budget was presented.
Two factors made the biggest difference: higher-than-expected revenues and lower spending on major capital projects.
The result gives the government a better-than-anticipated final figure, although the province is still facing a projected $13.3 billion deficit for the current fiscal year.
Billions in infrastructure spending moved forward
A large part of the improvement came from projects that simply did not move as quickly as originally planned.
Spending on hospitals, schools and post-secondary facilities was approximately $4 billion below budget because of what the government calls “project scheduling changes.”
Those projects represented about 25% of all taxpayer-supported projects during the fiscal year.
Bailey insists that the lower spending should not be interpreted as a cancellation of infrastructure plans.
“All of those projects are going ahead,” she said.
The province had set aside an aggressive $15 billion capital allocation, she explained, and approximately $4 billion of the planned spending will instead move into future fiscal years.
The detailed figures show just how much of the difference came from infrastructure. Spending on health-care facilities was more than $1.8 billion below budget, while highways and public transit came in $1.26 billion lower than forecast.
Education and post-secondary education spending was also $466 million below budget.
Another $463 million was left unspent in areas including social housing, core government operations and other Crown corporations.
According to Bailey, supply-chain problems played a role in pushing several projects further into the future.
Why “slippage” matters
The government’s explanation has also brought attention to the language it uses to describe project delays.
Earlier this year, Bailey said the province would “re-pace” some projects as part of an effort to reduce fiscal pressure.
She explained in March that re-pacing meant deliberately changing the timing of a project to control costs rather than cancelling it.
The latest figures, however, are being described as “slippage.”
Bailey says the two situations are different.
“Re-pacing is a deliberate pulling back of a project and looking at when we can deliver it and how to keep the costs down,” she said.
Slippage, by contrast, can happen naturally during the planning and construction of major projects, she said.
The minister acknowledged that forecasting exactly when large infrastructure projects will spend their allocated budgets is difficult — particularly under current global conditions.
That challenge has been amplified by global trade tensions and supply-chain disruptions, which can affect the availability and cost of materials, equipment and construction services.
Tobacco settlement delivers a major revenue boost
The province also benefited from a significant increase in revenues.
Total revenues came in $2.86 billion higher than previously budgeted.
A major reason was a legal settlement involving tobacco companies.
Under the agreement, the companies will pay British Columbia $3.6 billion over 18 years.
The province received an initial $936 million payment in August 2025, while the remaining $2.56 billion has been counted entirely toward the 2025-2026 fiscal year.
That accounting treatment provided a substantial one-time boost to the year-end financial result.
Bailey also pointed to economic growth. B.C.’s economy expanded by approximately 2% during the fiscal year, while the government continues to search for new revenue sources.
“The focus on economic growth is imperative,” she said.
Debt is still moving higher
The improved deficit figure has not stopped provincial debt from increasing.
B.C.’s debt reached approximately $154.7 billion, around $700 million higher than the government’s previous forecast.
That leaves the province facing a difficult balance between maintaining investment in infrastructure and public services while trying to control the cost of borrowing and reduce future deficits.
The challenge becomes even more significant when looking at the current fiscal year.
The government’s budget projects a record $13.3 billion deficit, with the first-quarter financial update expected next month.
Conservatives warn of more delays
The latest numbers have drawn sharp criticism from the opposition.
Peter Milobar, finance critic for the B.C. Conservatives, argues that the government is presenting the improved year-end numbers as evidence of fiscal discipline while avoiding what he sees as the deeper problem: years of record deficits and rising debt.
He accused the government of trying to portray itself as a “bastion of fiscal responsibility” despite continuing to forecast large deficits and, in his view, lacking a clear strategy for repairing the province’s finances.
Milobar is also watching the government’s infrastructure terminology closely.
He expects the September first-quarter update could show that projects described as being “re-paced” have experienced additional delays.
His concern is that projects could gradually move from re-pacing to slippage and eventually become vulnerable to cancellation.
For now, the government maintains that the projects remain on track and that the lower spending recorded in 2025-2026 reflects timing rather than abandonment.
The $7.7 billion deficit is undoubtedly better than the $10.9 billion forecast. But with $154.7 billion in debt, a projected $13.3 billion deficit ahead and billions of dollars in infrastructure spending still waiting to move forward, British Columbia’s fiscal story is far from over.
