B.C.’s budget surplus would be $7.2 billion, not the $1.5 billion B.C. Finance Minister Carole James reported this week, if the government had used independent accounting standards, the province’s auditor general said Friday.
Carol Bellringer said the public accounts released by James state the government’s financial performance fairly, with that one exception. Bellringer differs with Premier John Horgan’s government on how it records revenue that it receives primarily from the federal government.
The province does not record such revenue according to independent accounting standards, Bellringer said.
Instead, it records the revenues over a much longer period than the standards allow, meaning revenues from Ottawa have been under-reported and cloud the province’s true financial position, Bellringer said.
As of March 31, the B.C. government has deferred $5.7 billion in revenue over the years, she said. To correct its financial statements, Bellringer said, the government should have recorded the $5.7 billion as revenue, for a total reported surplus of $7.2 billion.
Generally accepted accounting principles require governments to record funds transferred from other levels of government for projects as revenue in their books as soon as the asset is bought or built, the auditor general said. However, under special circumstances, revenue can be deferred.
For example, Bellringer’s report said, if the B.C. government receives $40 million to build a highway in 2019, it doesn’t record the $40 million as revenue in 2019. Instead, it records $1 million per year over the 40-year life of the highway.
The B.C. government created a regulation that requires taxpayer-supported Crown corporations to record money they receive from other levels of government the same way the B.C. government records it, rather than in accordance with generally accepted accounting principles.
That is where the clouding comes into play, Bellringer said.
On Thursday, James said B.C. posted the $1.5-billion budget surplus for 2018-19 stemming in part from a $2.9-billion increase in revenues over budgeted projections.
“We are on a very strong fiscal footing,” James said. “I’m really proud of the work we’ve done.”
Government figures show B.C. has a total debt of $65.9 billion — $3.06 billion lower than estimated in the budget, but an increase from last year’s $64.9 billion.
James said increased revenue to allow for a balanced budget came about in part because B.C.’s economy grew by an estimated 2.4 per cent in the 2018 calendar year. The province had Canada’s third-highest growth.
Total revenue was $57.1 billion, up $5 billion from the previous year, and a significant increase on the $46 billion in 2014-15.
Bellringer said the audit is her office’s largest, looking at $57 billion in revenue, $56 billion in expenses, $95 billion in assets and $87 billion in liabilities.
“It’s a massive undertaking,” she said.
— Business In Vancouver