The Government of Ontario is forecasting a larger budget deficit this year as the provincial economy slows and the government increases spending to help lower-income workers.
Canada’s most populous province is forecasting a budget shortfall of $19.9 billion for the current fiscal year, up from $13.5 billion in the year that ended March 31.
Ontario Finance Minister Peter Bethlenfalvy released the province’s annual budget ahead of a provincial election that is expected in June of this year.
Ontario, which accounts for 40% of the Canada’s gross domestic product (GDP), is heading to a June 2 vote that may be a referendum on Premier Doug Ford’s handling of the pandemic and the economic recovery.
The government’s latest budget boosts a tax credit for low-income earners and makes more families eligible to receive it, a nod to rising inflation. The government previously announced that it’s temporarily cutting fuel taxes because of soaring energy prices, and it has also eliminated an annual fee that vehicle owners pay.
The budget also contains billions of dollars for highway projects, including in the Toronto region, and money to increase capacity in hospitals and long-term care centers.
Ontario forecasts total expenses of $199 billion for fiscal 2022-23, about $10 billion more than projected in the province’s fiscal update last November.
Net debt to GDP is expected to rise to 41.4%, and interest expenses will rise by about $500 million this year as rates move higher.
The Ontario budget will increase spending by an annual average of 5% over the next three years and provide money for health care, infrastructure and public services, Finance Minister Bethlenfalvy said in prepared remarks delivered in the provincial legislature.