British Columbia’s budget revealed continued improvement in the province’s budgetary performance, Standard & Poor’s Ratings Services said today. The budget showed that rising energy prices contributed to a significant improvement in B.C.’s budgetary performance to an operating surplus of 4.4% in fiscal 2006 (including the forecast allowance), from an initial fiscal 2006 estimate of 0.7% of revenue.

For fiscal 2007, the province is conservatively forecasting an operating surplus of 0.2% of revenue, which includes a substantial forecast allowance of $850 million for unexpected revenue shortfalls or potential spending pressures stemming from natural disasters. The province also provided for targeted tax and expenditure measures; however, there were no broad-based tax cuts or expenditure measures, the rating service said.

“On the expenditure front, B.C.’s main challenges will be the renegotiation of its collective bargaining agreements, which come due in the current fiscal year, and as such the province has incorporated assumptions in its expenditure estimates for increases in compensation for public sector employees,” said Standard & Poor’s credit analyst Mario Angastiniotis.

The province’s overall tax-supported debt is forecast to rise in the next three years as B.C. invests in the building and upgrading of essential infrastructure such as schools, universities, colleges, hospitals, and roads. Nevertheless, B.C.’s net tax-supported debt as a percent of GDP is expected to continue to decline as a result of the province’s expected solid economic performance in the next three years.