The following op-ed, by ICBA Chief Economist Jock Finlayson and consulting economist Ken Peacock, was first published in Business in Vancouver on October 7, 2026.
B.C.’s fiscal situation is increasingly dire. Several years of substantial deficits have helped to propel the accumulated debt sharply higher, while spending has continued to outpace revenues. The operating deficit for 2026/27 is now projected at almost $14 billion, according to the latest figures from the Ministry of Finance. (We believe the final tally will be higher.) Together with record borrowing to finance the government’s sprawling capital plan, the return of chronic operating deficits has paved the way for a veritable debt explosion under David Eby’s NDP government.
Since 2022/23, the debt has soared from $89 billion to reach $181 billion in the current fiscal year – more than doubling in four short years. As a share of GDP, the province’s total debt now amounts to 38.6 per cent of GDP, up from 22.3 per cent when Mr. Eby arrived in the Premier’s office. The solid financial track record of former NDP Premier John Horgan has been completely shredded by his successor.
The unprecedented deterioration of the province’s finances has shown up in B.C.’s credit ratings. All four rating agencies have issued debt downgrades since 2022 – eight individual downgrades in total. Over the same period, Quebec and Nova Scotia each experienced a single downgrade, while ratings in the other provinces have remained unchanged.
The roots of B.C.’s current fiscal mess can be traced back to a massive revenue windfall in 2022/23 and, more importantly, to what happened to spending as that windfall arrived.
With the province still emerging from the pandemic, Budget 2022 – tabled under former Premier John Horgan – forecast $68.6 billion in revenues and a $5.5-billion operating deficit. Within a few months, the financial picture had brightened. By the end of the first quarter, forecast revenue had jumped to $77.9 billion, boosted in part by rising commodity prices and increased natural-resource revenues. The expected $5.5 billion deficit had turned into a modest $706-million surplus.
One week after David Eby became premier, the Second Quarterly Report revealed another upside surprise. Revenue was now pegged at $81 billion, and the surplus was forecast to come in at a hefty $5.7 billion – a new record. The improvement largely reflected updated Canada Revenue Agency estimates that increased personal and corporate income-tax revenues.
Importantly, this fiscal uplift did not represent a permanently higher revenue trajectory. David Eby ignored the advice of his officials and outside experts and waved away the transitory nature of the revenue boost.
In the months that followed, expenditures rose sharply. Spending for 2022/23 ended $7.8 billion above what was originally budgeted. Revenues ultimately finished almost $13 billion above budget.
The more consequential developments came afterward. Spending did not return to a level aligned with the province’s medium-term revenue outlook. Instead, the higher expenditure track established in 2022/23 became the starting point for subsequent budgets.
That is the critical point. Governments frequently use unexpected revenue surges to fund temporary measures. But a jump in spending has different fiscal implications when it becomes embedded in the “permanent” expenditure base, as has occurred under Premier Eby.
Provincial revenues, meanwhile, continued to grow broadly in line with their pre-pandemic trend after 2023. Spending moved onto a higher path and continued to rise. As the gap between spending and revenues widened, the result was a growing structural operating deficit.
Overall, Premier Eby has presided over an almost $20-billion deterioration in B.C.’s underlying fiscal balance in just four years—going from a $5.7-billion operating surplus in November 2022 to today’s $14 billion (or more) deficit. The emergence of historically large structural deficits is therefore not principally a story of inadequate revenues. It mainly reflects the expenditure base moving sharply higher amid the 2022/23 revenue windfall and continuing to rise thereafter amid the wholesale breakdown of disciplined fiscal management in Victoria.
David Eby’s fiscal hole was dug quickly. Unfortunately, getting out of it will take much longer. Stronger economic growth, favourable commodity prices, and improved trade conditions would all help. But cutting the deficit means the government must first stop digging. Policymakers need to commit to both a comprehensive review of all spending activity and far better management of the government’s $100 billion annual spending budget. It will also be necessary to scale back current capital spending plans and re-assess the performance and adequacy of the province’s revenue base.
One thing is clear: no matter who wins the October 24 election, British Columbians should prepare for a period of grinding fiscal austerity.