$9.8 Billion Deficit Forecasted in Ontario Budget with Triple the Previous Estimate

The budget for Ontario is anticipating a deficit of $9.8 billion in 2024-2025, which is more than three times the current fiscal year’s $3 billion deficit. The increased expenditure is focused on housing and infrastructure amidst a sluggish economy.

Ontario Finance Minister Peter Bethlenfalvy highlighted the financial strains experienced by Ontarians and criticized the Federal government’s plan to raise the carbon tax. The budget does not include any tax hikes but does include higher infrastructure spending and an extension of the break on fuel tax.

Mr. Bethlenfalvy stated, “Given the global economic uncertainty and high interest rates impacting Ontario families, our government is investing to rejuvenate Ontario’s economy without increasing taxes.”

The infrastructure spending encompasses $1 billion for new housing construction through a provincial-municipal program and $825 million for water system upgrades, in response to Ontario’s population growth of one million since 2020.

Over the next decade, the province plans to invest over $190 billion to enhance highways, construct homes, hospitals, schools, and other critical infrastructure. The government aims to build 1.5 million new homes by 2031.

A substantial portion of this fund, over $27.4 billion for the next 10 years, is assigned to building and expanding highways, with $67.5 billion earmarked for public transit. This significant investment is meant to offset the lack of transportation infrastructure spending in recent decades relative to the population.

With the projected spending, the deficit for fiscal 2024-2025 is estimated to reach $9.8 billion, up from the government’s previous projection of $5.3 billion. The deficit is forecasted to decrease to $4.6 billion in fiscal 2025-2026, with a projected surplus of $500 million in 2026-2027, contingent on a robust economy.

Total Ontario Government spending is anticipated to rise from $207.3 billion to $214.5 billion, representing a 3.5 percent increase, largely in line with inflation.

The government foresees economic growth slowing to 0.3 percent in 2024, down from 1.2 percent in 2023, primarily due to higher borrowing costs resulting from increased interest rates.

Reuters contributed to this report.