Ontario’s deficit soars to $9.8B
■ Revenue shortfall costs coffers more than $7B ■ Provincial budget grows to a record $214.5 billion ■ Extra $2B earmarked for home and community care
The ink is red and the Tories are blue.
Amid a rapidly slowing economy, Ontario Finance Minister Peter Bethlenfalvy has tabled a record $214.5-billion budget with a $9.8billion deficit for 2024-25 — a staggering $10-billion swing from the $200-million surplus he projected last March.
“It has been a challenging year. Life has rarely been this expensive,” Bethlenfalvy conceded Tuesday in the legislature.
While Premier Doug Ford’s Progressive Conservatives still hope to balance the books in the pre-election budget before the June 2026 campaign, the province is awash in red ink due to lower than expected tax revenues.
“There is a light at the end of the tunnel. We can see it. But, that said, we are not out of the tunnel quite yet,” warned Bethlenfalvy, who defended the Tories’ decision to continue to spend more money than they take in.
“One choice would be to put the burden on taxpayers — to raise taxes, tolls, tuition or fees. Well, we are not going to do that,” the treasurer said.
“A second choice would be to tighten our belts — to cut investment in housing, roads, or better public services. In short, to retreat, and do less. We are not doing that, either,” said Bethlenfalvy.
“A third choice … might be to throw our hands up, retreat, and expect municipalities to fill in the gaps. We are not doing that,” he said.
“Instead, here’s our choice: We are going to follow through on a plan that is working — knowing that the higher deficits, compared to what we projected last year, will be timelimited while the return on investment will be felt for decades.”
In was a stark contrast to his optimism last year when a projected $19.9-billion deficit for 2022-23 had been slashed to $2.2 billion with the 2023-24 shortfall expected to be $1.3 billion.
That latter number has been adjusted to $3 billion — a 131 per cent increase.
For 2025-26, Bethlenfalvy is forecasting a $4.6-billion deficit and a $500-million surplus in 2026-27.
The drop in revenues has been dramatic — last March, the government believed it would collect $213 billion in taxes and fees in 2024-25, but that has been lowered to $205.7 billion. A $1-billion contingency fund balloons the deficit to $9.8 billion.
As well, settlements with public servants after the government’s Bill 124 wage-cap legislation was found to be unconstitutional have added billions in additional costs to the treasury.
The Tories are now spending 35 per cent more than former premier Kathleen Wynne’s Liberals did six years ago in their final budget of $158.5 billion.
Under Ford, the provincial debt has soared by $116 billion to $462.9 billion, the largest debt of any subnational jurisdiction in the world.
“We’re not immune to global forces,” Bethlenfalvy told reporters, referring to the COVID-19 pandemic, wars in Ukraine and the Middle East and worldwide inflation.
Against the backdrop of the $8.28billion Greenbelt land swap scandal now under investigation by the RCMP, the PC government is still aiming to build 1.5 million new homes by 2031.
In 2023, the Tories said 109,011 new homes were built — including 9,835 additional long-term-care beds that are now classified as housing.
That’s significantly lower than the average of 150,000 annual housing starts needed to meet the target, but tops the 80,300 reached in 2022.
Touting $3 billion in previously announced funds for cities and towns that are “supercharging municipal efforts to get housing built, Bethlenfalvy is sweetening the pot to encourage more rental construction.
Municipalities will be allowed to charge up to 35 per cent lower property tax rates on new purposebuilt rental units.
As first reported by the Star last Wednesday, the 200-page budget earmarks $9 million for a new York University medical school based in Vaughan to tackle the chronic shortage of family doctors.
More than 2.3 million of Ontario’s almost 16 million residents don’t have a family physician so the Tories hope the new school will help.
But it comes as the province’s universities and colleges are already having financial challenges due to a five-year tuition freeze and the federal cap on international students.
Mindful of cost-of-living concerns, Bethlenfalvy officially extended the temporary 5.7 cents a litre gasoline tax cut — first announced in the 2022 election — until Dec. 31.
That six-month extension will cost the cash-strapped treasury an extra $620 million this year.
As well, Bethlenfalvy unveiled minor reforms to auto insurance that will allow motorists to have lower rates if they opt out of some coverage that may duplicate measures in their workplace benefits plans.
The Tories are continuing the electricity subsidies for consumers that began under Wynne’s Liberals and will skyrocket from $6.1 billion last year to $7.3 billion in 2024-25.
But NDP Leader Marit Stiles said the budget falls short of what’s needed.
“People are looking for better health care and homes they can afford. Instead, they got an uninspired statement from a government that is out of touch and out of ideas,” said Stiles.
Liberal Leader Bonnie Crombie said it was a “do-nothing budget” at a time when people need better health care, more affordable housing and improved services
“Families and businesses in Ontario are hurting and Doug Ford is choosing to do nothing,” said Crombie, pointing to the Tories’ “catastrophic failure” to get housing built in the wake of the Greenbelt fiasco.
Green Leader Mike Schreiner said the fiscal blueprint essentially said “no to reducing the education repair backlog or the teacher shortage or ending Ontario’s last-place position on funding colleges and universities.”
“People are struggling, they deserve better,” said Schreiner.