2000 Legislative Session: 4th Session, 36th Parliament
FIRST READING


The following electronic version is for informational purposes only.
The printed version remains the official version.


HONOURABLE PAUL RAMSEY
MINISTER OF FINANCE AND
CORPORATE RELATIONS

BILL 28 2000

BALANCED BUDGET ACT

Contents

Section  
1  Definitions and interpretation
2  Purpose of Act
3  Balanced budget requirement
4  Salary penalties
5  Calculation of deficit or surplus
6  Adjustment for significant reductions in revenue
7  Adjustment for emergency expenses
8  Application of Act in relation to general elections
9  Consequential Amendment
Schedule

Preamble

WHEREAS a fundamental role of government is to ensure adequate investments in health, education, social justice and the environment for the greater public good;

AND WHEREAS the financial flexibility to make those investments is dependent on British Columbia continuing to maintain its position as one of the least indebted provinces in Canada;

AND WHEREAS equity demands that future generations of British Columbians not be burdened with an unsustainable level of debt;

AND WHEREAS the reduction and elimination of budgetary deficits must be carried out in such a manner as to protect the health and well-being of British Columbians and the environment;

THEREFORE HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

Definitions and interpretation

1 (1) In this Act:

"expense" means, in relation to a fiscal year, an expense of the taxpayer-supported government reporting entity for the fiscal year;

"forecast" means

(a) a forecast made in the main estimates or any supplementary estimates,

(b) a forecast made in a quarterly report made public under the Budget Transparency and Accountability Act, or

(c) a statement issued by the minister under section 4 (1) (c);

"maximum deficit" means, in relation to a fiscal year, the maximum deficit for the fiscal year as set out in the Schedule or, if applicable, as adjusted under section 6 or 7;

"revenue" means, in relation to a fiscal year, the sum of

(a) the revenue of the taxpayer-supported government reporting entity for the fiscal year, and

(b) the increase or decrease in unremitted earnings to the taxpayer-supported government reporting entity of self-supported government enterprises for the fiscal year.

(2) To the extent that this Act does not otherwise define a word or expression used in this Act, the word or expression has the same meaning as in the Budget Transparency and Accountability Act.

Purpose of Act

2 The purpose of this Act is to require the government to bring revenues and expenses into balance and to do so in a manner that protects the health and safety of British Columbians from emergency or unexpected circumstances.

Balanced budget requirement

3 The main estimates for a fiscal year must not contain a forecast of a deficit for the fiscal year that is greater than the maximum deficit.

Salary penalties

4 (1) Each member of the Executive Council is subject to the penalties provided in this section if, in respect of a fiscal year,

(a) the main estimates or any supplementary estimates contain a forecast of a deficit for the fiscal year that is greater than the maximum deficit,

(b) a quarterly report is made public forecasting a deficit for the fiscal year that is greater than the maximum deficit,

(c) the minister issues a public statement that, in the minister's opinion, the deficit for the fiscal year is likely to be greater than the maximum deficit, or

(d) the public accounts for the fiscal year are made public showing that the deficit for the fiscal year is greater than the maximum deficit.

(2) At the earliest applicable time under subsection (1), the salary otherwise payable to each member of the Executive Council under section 4 (6) to (8) of the Legislative Assembly Allowances and Pension Act must be reduced by 20% for the 12 month period immediately following that time.

(3) If at any time

(a) salaries are already reduced under subsection (2), and

(b) a circumstance referred to in subsection (1) applies in respect of another fiscal year,

the 12 month period of the reduction under subsection (2) for the other fiscal year begins when all other preceding reductions under this section end.

(4) Subject to section 8, a reduction in salary under this section applies to each person who is a member of the Executive Council during the period of the reduction, including persons who become members after the start of that period.

(5) If, after a reduction in salary is required under subsection (2),

(a) a subsequent quarterly report forecasts a deficit for the fiscal year that is not greater than the maximum deficit, or

(b) the public accounts for the fiscal year show that the deficit for that year is not greater than the maximum deficit,

the reduction under subsection (2) ends in respect of that fiscal year and the amounts by which the salaries were reduced must be paid as a refund to the persons whose salaries were reduced.

Calculation of deficit or surplus

5 (1) For the purpose of section 4, the deficit or surplus for a fiscal year must be calculated on the basis of

(a) the government reporting entity used in the preparation of the main estimates for the fiscal year, and

(b) the accounting policies used in those estimates.

(2) Subsection (1) of this section applies even if there is a change referred to in

section 11 (3) (a) [change to government reporting entity], or

section 11 (4) (a) [change in accounting policies]

of the Budget Transparency and Accountability Act but, in that case, the subsequent quarterly reports and public accounts in respect of the fiscal year in which the change is first effective must include both the deficit or surplus determined in accordance with that Act and as calculated under subsection (1) of this section.

Adjustment for significant reductions in revenue

6 (1) If

(a) the revenue for a fiscal year is forecast, or is determined in the public accounts, to be lower than the revenue of the previous fiscal year by more than $500 million, and

(b) the minister issues a public statement that

(i) identifies the amount of the reduction in revenue, and

(ii) describes the circumstances that led to the reduction,

the minister must, as soon as practicable, present a report respecting the matter to the Legislative Assembly.

(2) If the minister is required to present a report under subsection (1) and the Legislative Assembly is not then sitting, the government must request that the Legislative Assembly be recalled such that it can begin consideration of the report within 30 days after the statement is issued under that subsection.

(3) After the Legislative Assembly has considered a report under subsection (1), the maximum deficit set out in the Schedule for the fiscal year is increased by the difference between the amount of the reduction in revenue and $500 million.

(4) The following apply for the purpose of subsection (1):

(a) the revenue of the fiscal year for which the maximum deficit is being calculated must be calculated excluding any reduction of revenue directly resulting from an enactment that is enacted after March 31, 2000;

(b) the revenue of the previous fiscal year is to be calculated

(i) on the basis of the accounting policies that apply in determining the deficit or surplus for that fiscal year for the purpose of section 4, and

(ii) until the time the public accounts are made public, on the basis of the most recent forecast and, after that time, on the basis of the public accounts for that fiscal year.

Adjustment for emergency expenses

7 (1) If, after the presentation of the main estimates for a fiscal year to the Legislative Assembly,

(a) there is an expense that is not provided for or is inadequately provided for in those estimates, and

(b) the minister issues a public statement that

(i) states the expense is required because of emergency or unexpected circumstances that are detrimental to the health or safety of persons in British Columbia, and

(ii) describes those circumstances,

the minister must, as soon as practicable, present a report to the Legislative Assembly respecting the matter and, if applicable, must also present supplementary estimates.

(2) If the minister is required to present a report under subsection (1) and the Legislative Assembly is not then sitting, the government must request that the Legislative Assembly be recalled such that it can begin consideration of the report within 30 days after the statement is issued under that subsection.

(3) After the Legislative Assembly has considered a report under subsection (1), the maximum deficit set out in the Schedule for the fiscal year is increased by the amount of the expense.

Application of Act in relation to general elections

8 (1) Sections 6 (2) and 7 (2) [recall of Legislative Assembly] do not apply if the Legislative Assembly is dissolved before the end of the 30 day period referred to in those sections.

(2) The following apply if there is a general election and the political party forming the government after the election is different from the political party that formed the government at the time of the election:

(a) any penalty under section 4 that applied at the time the election was called ceases to apply;

(b) if general voting day for the election is on or before December 31 in a fiscal year, sections 3 and 4 do not apply in relation to a deficit for that fiscal year or for the previous fiscal year;

(c) if general voting day for the election is on or after January 1 in a fiscal year, sections 3 and 4 do not apply in relation to a deficit for that fiscal year or for the following fiscal year.

 
Consequential Amendment

Budget Transparency and Accountability Act

9 Section 11 of the Budget Transparency and Accountability Act is amended by adding the following subsections:

(3) If

(a) there is a change in the composition of the government reporting entity, and

(b) the estimated impact of the change on the forecast deficit or surplus for the fiscal year in which the change first applies, or for any of the following 3 fiscal years, is greater than $25 million,

as soon as practicable after the change, the minister must make public a report on that impact.

(4) If

(a) Treasury Board makes a change to the accounting policies for the government reporting entity, and

(b) the estimated impact of the change on the forecast deficit or surplus for the fiscal year to which the change first applies, or for any of the following 3 fiscal years, is greater than $25 million,

as soon as practicable after Treasury Board approves the change, regardless of when it is to take effect, the minister must make public a report on that impact.

 
SCHEDULE

Fiscal Year Maximum Deficit
2000/2001 $1 278 million
2001/2002 $950 million
2002/2003 $700 million
2003/2004 $400 million
2004/2005 and subsequent fiscal years $0

 
Explanatory Notes

This Bill is to provide fiscal responsibility by legislating


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