The provincial government will have $3 billion less in revenues to spend over the next three years than previously projected, but finance minister Colin Hansen said no major cuts are planned yet.

“We'll be looking across all ministries for savings,” said Hansen, answering question after delivering the Second Quarterly Report on the province's finances. The government is preparing its budget to be presented on February 17, 2009. “This is the most challenging budget we've ever put together . . . This is a year where there will be little opportunity for us to put in new programs or indeed expand existing programs.”

While revenue projections have dropped by $570 million this year, the government still has a projected surplus of $450 million. Hansen said the government will bring forward supplemental estimates in February to spend some of that in the current fiscal year.

“This is not the year for the province to be running surpluses that are in the billions of dollars,” he said. There will more money for health as well as other areas, he said.

The government will also look ministry by ministry for places to cut things like unnecessary travel and contracted consultants, he said. He failed to rule out raising taxes. “The bottom line is we will not be running a deficit,” he said. “I am confident we'll be able to deliver a balanced budget in each of the next three years.”

NDP finance critic Bruce Ralston said the government will have to start cutting at some point. "The government continues to spend like it's last year," he said. "There seems to be a failure of the minister of finance at this point to level with people about what's going to take place in the budget process."

As pointed out by The Tyee last week, and acknowledged by Hansen today, the economy is very volatile these days and the professional forecasters are having a difficult time making predictions.

With the provincial election set for May 12, both the NDP and the Liberals are promising to keep balanced budgets and avoid running a deficit.

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria. Reach him here.