Budget 2000
Ministry of Finance and Corporate Relations
Honourable Paul Ramsey, Minister		 Reports
This electronic version is for informational purposes only.
The printed version remains the official version.

Report B: FISCAL REVIEW AND OUTLOOK

TABLE B9
MAIN EXPENDITURE ASSUMPTIONS AND FORECAST RISKS 
— CONSOLIDATED REVENUE FUND
Expenditure Area

Key Assumptions

 Forecast Risks and Sensitivities
Ministry of Health
Acute and Continuing Care
$4,491 million		 Funds all signed collective agreements ($164 million increase).
Funds up to an additional 600 nurses.
Provides for a combination of enhanced continuing care services — up to 520 new beds (current provincial total is 25,600) or 1 million additional hours of home support services (current provincial total is 9.3 million).
Funds operating costs ($4.4 million) of 194 new continuing care beds opening in 2000/01. Funds treatments for up to 560 additional cancer cases; 70 additional organ transplants; 259 additional cardiac cases; and 250 additional renal dialysis cases.
Assumes zero population growth for other acute and continuing care.		 A 1% change in population affects regional health programs expenditure by approximately $50 million.
Medical Services Plan
$2,053 million		 Funds population growth (1.4%), but assumes no utilization growth for supplementary benefits; forecast growth in utilization of physician services (1.5%) to be partially offset by new utilization management measures. A 1% change in utilization of physician services affects costs by $16 million.
A 1% change in utilization of supplementary benefits affects costs by $1.3 million.
There is no hard cap on physician billings for the duration of the working agreement (i.e. to the end of March 2001).
Pharmacare
$661 million		 Funds 1999/00 shortfall ($23.6 million) and provides for increased program demand, drug costs and some new drugs ($87.8 million).
Assumes average utilization increase of 4.6% and a drug cost increase of 3.8%.		 A 1% change in utilization (average across all plans) affects expenditures by $6.6 million.
A 1% change in drug prices affects expenditures by $6 million.
Emergency Health Services
$145 million		 Funds operation of ambulance services, including all existing collective agreements.
Assumes zero call volume growth in 2000/01.
Funds approximately 300 paramedics to access training in 2000/01 to upgrade their accreditation in accordance with the collective agreement.		 Negotiations between government and the BC Ambulance Service to renew the collective agreement (expires March 31/00) were not concluded prior to the budget.
A 2% change in compensation costs affects expenditure by $1.7 million.
A 1% change in call volume (ground) affects expenditure by $1.3 million.
Ministry of Education
K to 12 Education Programs
$4,520 million		 Enrollment is currently 601,846 students. Forecast assumes zero enrollment growth for 2000/01 (compared to a 0.2% decline in 1999/00).
Funds class size reduction in K to 3 grades at a cost of $13.7 million.
Funds all signed collective agreements and accords.
Reflects changes in student population composition.
A $10-million contingency buffer is included for unexpected enrollment growth or other pressures.		 Higher or lower enrollment growth may affect expenditures. A 1% change in enrollment affects costs by $37.3 million.
Collective agreement negotiations with CUPE were not concluded prior to the budget. A 1% increase in support salaries costs $7 million.
A 1% change in interest rates affects debt service costs by $3 million.
Ministry of Advanced Education, Training and Technology
Post Secondary Education Programs
$1,652 million		 The budget reflects:
—  total funded spaces in 2000/01 of 149,470;
—  5,025 new post-secondary student spaces ($39 million);
—  enhanced funding for post-secondary institutions ($38 million), which includes the cost of the tuition freeze and salary and benefit increases;
—  replacing the federal contribution to Royal Roads University ($3.8 million); and
—  new initiatives such as equipment and libraries ($9 million).
Collective agreement and accord negotiations with CUPE were not concluded prior to the budget. Each 1% increase in CUPE salary and benefits costs approximately $3.6 million.
Student Financial Assistance
$130 million (included in Post Secondary Education Programs above)		 Provides for:
—  recognition of actual 1999/00 costs and an anticipated 5% increase in demand in 2000/01 ($14 million);
—  the anticipated increased cost of the risk-sharing program with financial institutions; and
—  extending British Columbia student grants to private institutions ($5 million).
These increases are partially offset by savings/reductions, including:
—  making the BC student loan program consistent with the federal student loan program and transferring the loan collection function to the provincial government Loans Administration Branch ($8 million); and
—  increasing the weekly needs thresholds at which a student is eligible for a British Columbia student grant, from $105 to $125 ($8 million).
Higher or lower demand rates are variables beyond the control of government. A 1% change in demand affects costs by $1.3 million.
A 1% change in interest rates affects costs by $2.4 million.
The cost of renewing the risk-sharing agreement with financial institutions could be higher than anticipated.
Ministry of Social Development and Economic Security
BC Benefits Programs (Income assistance (IA) and related programs)
$1,681 million		 Caseload will decline 4.2% in 2000/01 (the decline in 1999/00 was 4.5%). Average caseload in 2000/01 is estimated at 154,639.
Reflects reinstatement of the flat-rate earnings exemption ($30 million), effective January 2000; and a 2% IA rate increase, effective July 2000 ($23 million).		 Deterioration of the provincial economy is a risk to the IA budget.
A 1% change in caseload affects expenditure by $12.4 million.
Child Care Services
$166 million (included in BC Benefits programs above)		 Assumes the number of subsidized day care spaces will increase 5.2%, from 38,300 in 1999/00 to 40,300 in 2000/01.
Provides a $14-million partial-year allocation for a school-based day care program — full-year costs are estimated at approximately $30 million in 2001/02. This program is still under development.		 Higher or lower demand for child care services are variables beyond the control of government. A 1% change in caseload affects expenditure by $12 million.
Housing Programs
$104 million		 Provides for subsidy requirements for housing units and full-year funding for the sales tax relief grant program introduced in 1999/00.
Assumes a five-year mortgage interest rate of 7% and no change in tenant incomes.
No additional funding provided to implement recommendations of the second Barrett report on condominiums.		 Rent subsidies account for 70% of expenditures and are sensitive to changes in mortgage rates and changes in tenant incomes (tenant rent revenue is equal to 30% of income).
A 1% change in mortgage rates affects provincial contributions by $0.8 million.
A 1% change in tenant incomes affects provincial contributions by $0.9 million.
BC Family Bonus Program (administered by the Ministry of Finance and Corporate Relations)
$152 million		 Caseload levels expected to increase by 1% (to approximately 230,000 families), and family incomes to rise, which will offset budget pressures from caseload adjustments.
Provincial costs have been reduced in response to improvements to the federal program.		 A 1% decrease in family incomes, without any change in caseload, results in a $3 million increase in provincial costs.
Ministry for Children and Families
$1,501 million		 Assumes the average monthly children-in-care caseload will decline 3.1%, from 9,650 in 1999/00 to 9,350 in 2000/01.
Provides $111 million for the direct compensation costs of the Community Social Services agreement, and $27 million for the indirect costs.
Provides a $12-million allowance for the continued care of the 97 migrant children who arrived in 1999, and for an additional 90 to 120 children.		 Costs could vary depending on the rate of unionization, the demand for labour adjustment and the impact on cost reduction initiatives.
Additional migrant children each cost approximately $6,000 per month.
There is no provision for foster care rate increases, which could result in children being placed in higher cost care.
Ministry of Labour
British Columbia Gaming Commission
Distribution of Gaming Revenues to Charities
$100 million		 Assumes revenue sharing with charities at $100 million. This provides for inflation; an expected decline of $6 million in direct bingo revenues; and a $6-million increase in reimbursements to bingo operators. If charitable bingo revenue is 5% lower than assumed, this could result in an increase of $2 million in government assistance to charities and operators.
Ministry of Attorney General
Statutory Services
$50 million		 Provides:
—  $25 million for Criminal Injuries Compensation Act settlements,
—  $11 million for Crown Proceeding Act settlements (based on 5 year average settlement costs),
—  $12 million for emergencies such as floods and blizzards; and
—  $2 million for inquiries that may arise over the course of the year.
An unusual number or severity of natural disasters, such as forest fires or floods is a risk.
Higher-than-assumed volumes or costs per case for Criminal Injuries Compensation Act and Crown Proceeding Act settlements also represent a risk.
Police Services
$153 million		 Funds provincial portion of policing services to municipalities having a population of less than 5,000, rural populations and specialized functions including highway patrol (total 1,691 officers). Provincial funding requirement is dependent on the federal allocation of funds to provinces and the RCMP allocation to the provincial force. Federal allocation to the province and the RCMP allocation to the provincial force may be higher than expected. A higher-than-expected allocation to the provincial force has to be matched by the province. These allocations are dependent on the number of members and vacancies (currently 150 provincial vacancies) and both allocations are beyond the province's control. Policing is a provincial responsibility with the federal government paying 30% of the provincial force. Each additional provincial officer costs the province $90,000.
Adult Custody
$158 million		 Assumes the number of remanded and sentenced adult offenders remains within 2,200 to 2,400 target (currently 2,325) in 2000/01. Costs are affected by the number of prisoners held in provincial correctional facilities. Every 1% change in the prison population affects costs by $1.4 million.
Ministry of Aboriginal Affairs
$43 million		 Provides for resources to support the treaty process and for programs associated with First Nations' heritage, language and culture.
Assumes Nisga'a and one additional treaty will be ratified in 2000/01.
Independent studies indicate that all treaties could be settled by 2019.
Provides $2.2 million for the amortization of settlement and implementation costs.		 Actual expenditures are affected by the pace of treaty settlements. There is minimal expenditure risk to the province in 2000/01 for ratifying additional treaties, due to the structure of cost-sharing arrangements with the federal government.
Ministry of Agriculture, Food and Fisheries
$100 million		 Provides for agriculture and food program enhancements and programs in support of rural development.
Risk management programs, including crop insurance and whole farm insurance are adequately funded to cover crop loss as a result of natural disasters.
Provides contributions to Fisheries Renewal BC for salmonid renewal, development and diversification, and planning.		 An extraordinary agricultural disaster could result in requests for government to cover costs not eligible under existing risk management programs.
Ministry of Forests
Direct Forest Fire Fighting
$30 million		 This provision is sufficient funding for a "moderate" fire year. Wetter/dryer than normal weather, particularly in the Interior, will affect costs.
The annual cost of fighting forest fires has varied from $19 million to $154 million.
Ministry of Transportation and Highways
Highway Maintenance
$405 million		 Funding provided to meet all known contractual obligations.
Assumes 35 cents per litre for diesel fuel rising by 10 cents per litre over the fiscal year (used by inland ferries).
Assumes 72 cents per litre for gasoline rising by 20 cents per litre during construction season (used by light and heavy equipment).		 Every 1 cent per litre increase in diesel fuel prices increases inland ferry operating costs by $25,000 per year.
Every 1 cent per litre increase in gasoline prices increases equipment operating costs by $27,000 per year.
Contributions to BC Transit
Operating Contributions
$44 million		 $4 million budget increase assumes planned service expansions (1.5% increase in service hours); additional corporate costs resulting from the establishment of the Greater Vancouver Transportation Authority ($0.44 million); and $1.5 million for one-time research and development of fuel cell test engines.
Assumes number-one diesel fuel price of 44 cents per litre.		 Every 1 cent per litre increase in fuel prices increases BC Transit operating costs by $150,000 per year.
Debt Servicing
$1,009 million		 Long-term and short-term borrowing rates for the fiscal year average 7.4% and 6.0%, respectively.
As of March 2000, long-term rates are averaging 6.4%; short-term rates are averaging 5.4%.		 1% change in interest rates results in $68 million change in direct operating debt interest expense; up to $90 million change when other taxpayer-supported debt is included.
Contingencies (All Ministries) and New Programs
$125 million		 Provision for uncertain or unforeseen issues arising over the year for which no other budget provision currently exists.
Provision for start up of new programs under development.		 Unforeseen pressures in ministry programs may exceed available appropriations.
Amortization of Unfunded Pension Liabilities
($130 million)		 Any agreements resulting from negotiations on joint trusteeship will not take effect until after March 31, 2001. No pension plan amendments are anticipated in 2000/01.
Actuarial evaluations to be completed in 2000/01 will not increase unfunded pension liabilities.		 Joint trusteeship discussions which are underway would likely have a neutral or positive impact on the 2000/01 deficit if concluded in 2000/01. Plan amendments could result in increased/decreased expenses.
Actuarial evaluations are expected to result in reductions in unfunded pension liabilities. A $100 million change in liabilities would change expenditure by $9 million.
 
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