B.C.’s finance minister British Columbia’s budget surplus for fiscal 2004/05 surplus is now forecast to be $1.9 billion, according to the second quarter report of the B.C. Ministry of Finance released today.

That’s an increase of $1.1 billion from the $865 million surplus forecast in the first quarterly report.

The higher forecast is due mainly to new federal transfers from changes to the equalization program, initially tabled at the First Ministers’ Meeting on Health Care in September 2004, and an increase in corporation income tax revenue as a result of the province’s stronger performance in 2003.

The higher surplus also reflects higher forest revenue and an improvement in commercial crown corporation net income, offset by reductions in energy revenue and lower provincial sales tax revenue due to the government’s decision to cut the tax rate to 7% from 7.5%.

Ministry spending is little changed from the first quarter. Ministries are on budget, except for this summer’s fire fighting costs and the distribution of proceeds to northern communities and First Nations as a result of the BC Rail Investment Partnership.

Total government debt is forecast to decline by $814 million to end the year at $37 billion. The total debt-to-GDP ratio, a key debt management indicator, is forecast to fall to 24.1%, the lowest since 1990/91.

In early November, Standard and Poor’s provided B.C. with its first credit rating upgrade in fifteen years citing the government’s financial and economic track record.

“As we work to keep the budget balanced and grow the economy, I’m hopeful we’ll see further upgrades from other agencies,” Finance minister Gary Collins said. “Lower debt and lower interest costs mean we’ll be able to direct more resources to our schools, hospitals and communities.”

“Our economy continues to build on last year’s solid results, where British Columbia grew faster than the national average for the first time in seven years,” said Collins. “Again this quarter, we’re seeing strong, positive results right across economic sectors.”