Ontario is back in black as budget deficits eliminated, fiscal watchdog says
Ontario is in back in the black, according to the province's independent fiscal watchdog.
The Financial Accountability Office (FAO) issued a report Thursday that projects Premier Doug Ford's Progressive Conservatives will have budget surpluses this fiscal year and through 2027-28.
That will put pressure on the Tories to loosen the purse strings amid contract negotiations with public-sector unions representing workers such as teachers and education support staff.
With a strong economy driving extraordinary revenue growth, the province recorded a $2.1-billion budget surplus in 2021-22," the FAO said in a new 12-page report.
That's just the ninth budget surplus in more than forty years - the most recent one was under finance minister Charles Sousa in 2017 when Liberal Kathleen Wynne was premier.
This surplus was a sharp reversal from the deficits projected by both the FAO and the government," the report said.
The 2021-22 budget surplus primarily reflected extraordinary growth in revenue as strong employment growth and high inflation pushed up incomes, household spending and tax revenues," it continued.
Indeed, last year, the PC government saw an increase in tax revenues of $20.8 billion, which is a greater gain in one year than the tally of the previous five years.
While revenue growth is projected to slow from its current pace, it will continue to outpace program spending increases ... leading to growing budget surpluses from ($100 million) in 2022-23 to $8.5 billion in 2027-28," the report said.
These surpluses are a substantial improvement compared to the deficits forecast in the 2022 Ontario budget," it noted.
Ontario's economy expanded rapidly in 2021 and 2022 as the province recovered from the pandemic."
If current trends continue, the province's net debt-to-gross domestic product ration is expected to plunge from 39.2 per cent last year to 30.5 per cent in 2027-28, the lowest since Liberal premier Dalton McGuinty was in office in 2008-09.
The FAO report comes ahead of Finance Minister Peter Bethlenfalvy's fall economic statement that will be delivered within the next three weeks.
Emily Hogeveen, Bethlenfalvy's director of media relations, emphasized the watchdog's report does not include the future actions our government will take to hire more health care professionals, build new roads and bridges, invest in education, and more."
While the FAO's report argues the government's spending plan includes a $40 billion shortfall in program spending, they have excluded their estimated $44 billion in contingency funding from their own projection," said Hogeveen.
The FAO's projections for economic growth do not reflect more recent forecasts that have incorporated up to date economic uncertainty," she said.
It is our job as careful and responsible managers of taxpayer dollars to listen to a diversity of private sector forecasters and build prudence into our plan, which is exactly what we did in our 2022 budget and what we will continue to do."
Last month, the treasurer revealed a surprise $2.1 budget surplus, which forced him to cancel an annual pay hike of almost $26,000 for MPPs that would have been triggered by legislation McGuinty passed in 2009 that froze their wages.
With workers and families struggling with increased costs, now is not the time for politicians to be receiving raises," Bethlenfalvy said on Sept. 23.
In his most recent budget - tabled in April before the June 2 election then reintroduced in August - he had forecast a deficit of $13.5 billion.
Robert Benzie is the Star's Queen's Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie