Auditor general Carol Bellringer passed judgment on the B.C. government’s books on Tuesday.
They’re in terrible shape. They’re so bad that the government has $191 million more in revenue in the past year than it is actually recording. They’re so bad that there’s $4 billion in revenue over past years that didn’t get included properly in the count.
That’s not exactly the kind of thing an opposition can go to town on. “B.C. Liberals have more money coming in than they can count” doesn’t really work as a line of attack.
“Why should this matter?” Bellringer asked at one point in her report. The answer runs headlong through the intersection of public accounting and politics. It matters, she said, because deferring the money means the government is not recording revenue in good years. And if it’s recorded in less favourable years, “it may cloud the true financial health of the province.”
That might be an accounting problem, but it’s a political jackpot. Having hundreds of millions of dollars that you can add into the books far into the future is the kind of cushion that most governments can only dream about. It’s not so much a political stunt as ultra-conservative bookkeeping.
For example, if B.C. gets federal funding for a bridge that takes two years to build, conventional standards require the revenue to be recorded over the two years of construction. But B.C. records the revenue a bit at a time over the 50-year life of the bridge. It creates a significant difference in the annual bottom lines over time, Bellringer said.
Other random findings from her annual report follow:
• The government came out ahead in terms of savings during the 2014 teachers’ strike. The total savings from the school shutdowns amounted to about $186 million. The government made a dramatic move in the middle of that dispute, offering parents $40 a day per child to offset daycare and other costs for children under 12 incurred while schools were shut. That wound up costing $157 million.
• The sale of surplus assets was a hot topic a few years ago, with questions raised about whether the B.C. Liberals were selling below real value in order to raise some quick cash. The report highlights fluctuating revenues from that program over the past two years. In 2013-14, it brought in $601 million, as the Liberals were emerging from deficit budgets. The next year, $200 million was budgeted as revenue, but it produced only $135 million, with some revenue being deferred until this year.
The auditor general is still interested in getting some answers to questions about whether full value was obtained, so an audit is underway.
• Contractual obligations are a little-noticed aspect of most budgets, but Bellringer highlighted the cumulative total and how fast it has been climbing. It’s the value of all contracts the government signs that commit it to future payments.
In 2010, the total future obligations amounted to $53 billion. A year later, B.C. Hydro had signed deals with independent power producers worth $25 billion, which helped push the total value to $80 billion. The next year, more IPP deals were signed and a new provincial contract with the RCMP was signed, which pushed the total to $96 billion.
By March 2015, the total had risen to $102 billion. The obligations can last up to 50 years. That information is difficult to digest in the public documents, and the auditor general has repeatedly asked government to report more information about the obligations. They include numerous public-private partnerships, the ferry system and numerous deals with universities. Bellringer said they have the advantage of locking in prices for future services, but they also reduce government’s long-term flexibility.
• The long-running argument between the auditor general and the Finance Ministry about variances in how B.C. keeps the books compared to general standards continues. After auditing 141 public entities, only 34 got an unmodified audit report. “Auditors should rarely have concerns with financial statements, yet there continues to be a notable number of entities in the B.C. government that received compliance or modified audit reports.”
