Ontario’s fiscal watchdog says this year’s budget deficit is $12.3 billion — $1.2 billion lower than Finance Minister Vic Fedeli has projected.
But financial accountability officer Peter Weltman also warned huge shortfalls will continue into the future unless the Progressive Conservative government makes dramatic spending cuts or increases taxes.
In last month’s fall economic statement, Fedeli said the shortfall has ballooned to $14.5 billion. He did not include value of the province’s $1 billion reserve fund, which would have brought the deficit down to $13.5 billion.
Weltman insisted his calculation, which is $1.2 billion lower than the government’s figure, is the correct one.
The difference is mainly due to the government’s lower forecast of tax revenue.
Veinot, who was the government’s chief accountant, resigned because she “did not agree with accounting decisions made by the current government.”
“I believe that the consolidated financial statements of the province of Ontario as issued … materially overstate the deficit of the province for the year,” she said in a submission to the legislative “transparency” committee examining the province’s books.
The accountant says the shortfall is $5 billion lower than Fedeli’s estimates because he excluded the government’s share of the co-sponsored Ontario Public Service Employees’ Union Pension Plan and the Ontario Teachers’ Pension Plan as assets on the books.
Neither Weltman nor auditor general Bonnie Lysyk count the pension as assets even though they were booked as such until Lysyk changed her mind in 2015.
In his report Monday, the financial accountability officer projected next year’s deficit would be $15.1 billion and $16.4 billion by 2022-23.
“While the government has not indicated when it intends to balance the budget, it has committed to not raising taxes,” said Weltman.
To get Ontario back into the black before the 2022 election without tax hikes would require that program spending growth be held at 1.2 per cent annually.
That would require Ford’s government to cut the equivalent of $850 per person from today’s levels by the next campaign.
Weltman notes that beyond forgoing the $1.9 billion in cap-and-trade proceeds, the government will also lose $500 million in revenue from its new income tax cut for people earning less than $30,000 a year.
The low-income individuals and families tax credit (LIFT) was one of the Tories’ signature campaign promises.
Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie