Marc Dalton called his government's budget "thoughtful" and "prudent" given the economic challenges worldwide and financial downtown four years ago.

"We're righting the ship from the 08-09 recession," he said.

The BC Liberal government announced plans to privatize the liquor distribution branch, increase MSP premiums and some business taxes, and to sell off hundreds of millions of dollars in surplus government properties.

"We made a commitment to the people of British Columbia to return to balanced budgets by 2013-14," Finance Minister Kevin Falcon told the legislature as he tabled B.C.'s new budget. "We will honour that commitment."

Falcon said government will run a $968 million deficit for the coming 2012/13 fiscal year, but said it hopes to return to balance by 2013-14 - the year it is legally obligated to do so.

Getting back into the black, commented Dalton, is "really important for our kids and grandkids."

To balance the budget, Falcon said his government will cancel a drop in the small business corporate income tax rate, keeping it at 2.5 per cent instead of dropping it to zero as had been planned for this coming April.

Falcon also unveiled a very conservative spending plan that holds the line for many ministries and prescribes an annual growth in program spending of just two per cent per year over the next three years.

"It exacts a discipline on government that is, I think, proportional to the kind of international economic environment we find ourselves in," said Falcon of the three-year spending plan.

The moves on taxes and spending all come as Falcon tries to eliminate what was projected to have been a $706 million deficit in 2013-14 budget had the government done nothing.

It also comes as the province moves to transition from the Harmonized Sales Tax back to the PST - a change that has helped push the deficit for the 2011/12 fiscal year to $2.4 billion from an initial projection of $925 million.

As a result of the measures announced Tuesday, Falcon is now projecting a $154 million surplus for the 2013-14 fiscal year. In 2014-15, he is projecting a surplus of $250 million.

NDP MLA Michael Sather said he would have liked to have seen more for the forestry budget and was surprised there was no mention of the environment.

"We're very blessed with having a rich environment in B.C.," he said, adding that tourism is a "huge economic generator."

While the Liberal government criticizes the NDP have spent a lot of money while in government, Sather said he doesn't see "anything prudent about their budget or spending."

- with files from Jonathan Fowlie from the Vancouver Sun