Strong economic conditions, increased federal transfers, and sound fiscal management helped generate a record $2.6 billion surplus and a record $1.9 billion reduction in total provincial debt, reported B.C.’s finance minister Carole Taylor today in releasing the province’s audited financial statements.

“Today’s release of the Public Accounts is an important milestone,” said Taylor. “It confirms that we achieved our three-year plan to balance the budget. It also demonstrates that our policies and strategies to revitalize B.C.’s economy are generating stronger revenues.”

British Columbia’s economy grew by 3.9% in 2004, the strongest growth among the provinces. Domestic activity continued to be the main driver of economic growth with strong job creation, business confidence, and investment.

B.C. Finance reported that in fiscal year 2004/05, stronger economic conditions and new transfers from the federal government boosted total provincial revenue to $33.2 billion, a $4.2 billion increase over the previous year. Provincial expenses totalled $30.7 billion, an increase of $323 million over the previous year. This resulted in a $2.6 billion surplus, a significant improvement over the $1.3 billion deficit in 2003/04.

Also, total provincial debt fell to $35.8 billion, a record decline of $1.9 billion. The taxpayer-supported debt-to-GDP ratio, a key measure of debt affordability, declined to 18.3% – its lowest level in 12 years, the government said.

Taylor cautioned that the size of the 2004/05 surplus is not likely to be repeated over the next three years. The extra revenues were committed in the February budget toward income tax and premium reductions for lower- and moderate-income earners, funding increases for health care, education, and other priority programs, and larger forecast allowances to cover revenue risks or spending pressures including future public sector wage settlements. As a result, the forecast surplus for 2005/06 is a smaller $220 million and $200 million in both 2006/07 and 2007/08.

Auditor General Wayne Strelioff added that, “British Columbia now leads the provinces in complying with GAAP and the inclusiveness of its budget and financial reports.”

In addition to the Public Accounts, the Province also released reports on ministerial accountability, government’s annual strategic plan, and annual service plans for ministries and government agencies.