In the face of what is described as the greatest economic crisis in a generation, the B.C. government on Tuesday tabled a budget that predicts a skyrocketing deficit, and that will see more money come out of many residents' pockets.

The provincial deficit, forecast in February's budget to be $495 million, is now expected to reach $2.8 billion.

"We now expect to return to a balanced budget in 2013," said Finance Minister Colin Hansen.

Hansen said the economic decline, recession and current events, including the worst forest-fire season on record, forced the government into deficit financing after five balanced budgets in a row, multiple billion-dollar surpluses and record job creation numbers.

To help pay for a 45-percent-increase in health-care costs, medical insurance premiums will go up by $3 per month for individuals, or $6 per month for families, starting Jan. 1, the province said.

By 2012, families will be paying more than $1,500 per year in premiums, an increase of more than $200.

However, costs will decrease for seniors and low-income families.

The province is planning to spend more in certain areas, including $151 million to allow half of British Columbia's five-year-olds to opt for full-day kindergarten next year, with the remaining half getting access in 2011.

Hansen continued to defend the 12 percent harmonized sales tax, saying that it will encourage investment, lower production costs and increase wages.

"It means more jobs, more growth, and, over time, higher revenues from resource royalties and business taxes to support services we all depend on like health care and education," he said. "In the short term, consumers will face higher prices for some goods and services."

The province says it will provide some HST relief by increasing the basic personal exemption to $11,000 from $9,373, effective Jan. 1, and a rebate for residential energy costs.

The province received $1.6 billion from Ottawa to switch to the HST, of which the government put $750 million towards the current budget, Hansen said.

Meanwhile, the province has now set aside a record $409 million to fight forest fires in the year ahead.

It is also spending an extra $80 million to combat the H1N1 flu virus.


Immediate reaction has been mixed.

Jock Finlayson, executive vice-president of the Business Council of British Columbia, said he thinks the government has struck a good balance.

"There's some tax cuts. We weren't expecting large tax deductions. There's some in there, more than I would have expected, and that will be well received in the business community," he said.

Jim Sinclair, president of the B.C. Federation of Labour, zeroed in on job losses.

"Many ministries have had their budgets cut dramatically. Some 25 per cent, 15 per cent. So we know we're going to lose up to 1,500 to 2,000 jobs in those places. So it's killing jobs," he said.

Sinclair added: "The other thing they'll do is bring in the HST. Despite the gobbledygook up there, it's going to cost you and me and the average British Columbian more to get by on."

Under fire

Meanwhile Premier Gordon Campbell and Finance Minister Colin Hansen are under fire after it was revealed today that they knew how bad the deficit was going to be, but kept it quiet during the election.

For the first time today, Hansen admitted he was told during the election that revenue figures were collapsing around his spring budget.

"It was actually a casual conversation in the middle of the election where the deputy indicated to me that our revenues may be under pressure to the tune of $200, $300 million dollars," he said.

But the politicians never told the public. In fact, they kept telling British Columbians everything was fine with the spring budget.

Confronted with Hansen's statement, Campbell now says he, too, had knowledge of financial trouble before voting day.

"I had heard that revenues were coming off, yes. A week before the election, maybe the Thursday before the election," Campbell said.

Both politicians say they believed B.C. could still make the $495 million deficit target and didn't feel a need to tell anyone of the financial mess.

"This just proves the point that this entire budget is a lie. They deceived British Columbians and British Columbians are going to pay for it and that's what makes me so angry," said NDP leader Carole James.


Here are key highlights from Tuesday's budget:

- The provincial deficit, which had been predicted to be $495 million in February, is expected to reach $2.8 billion.

- Medical service insurance premiums will go up by $3 per month for individuals, or $6 per month for families.

- Provincial revenues are expected to decline by $2 billion.

- Full-day kindergarten will be introduced for half of the province's five-year-olds by next year and for all of them by 2011, a cost of $151 million.

- The basic personal income tax credit is being increased to $11,000 from $9,373.

- The small business income tax threshold will go up to $500,000 from $400,000, effective Jan. 1.

- The province has budgeted $409 million to fight forest fires in the year ahead, an increase of $347 million from the February budget.

- $80 million in new money spent to vaccinate British Columbians for the H1N1 virus.

With files from CTV British Columbia's Jim Beatty and Chris Olsen and The Canadian Press