Provincial debt balloons with $244-billion budget

TORONTO – The provincial budget tabled by the Doug Ford government on March 26 is mired in red ink, with a ballooning provincial debt load to support heavy spending.

The government wants to spend $244 billion in the 2026-27 fiscal year and carry a projected deficit of $13.8 billion — nearly double the $7.8 billion projected in November’s economic statement. The revised debt projection brings the province’s cumulative debt to a total of $485 billion this fiscal year.

That total is projected to surpass half-a-trillion in 2027-28 at $514 billion, and $529 billion one year later.

When the Tories took office, during the 2018-19 fiscal year, the provincial debt stood at $338 billion. The province’s debt load has increased by 43% since then.

Interest payments on debt alone are expected to consume more than $17.2 billion taxpayer dollars in the 2026-27 fiscal year before increasing to $18.6 billion in 2027-28 and almost $20 billion in 2028-29.

After spending on health care ($101.2 billion), education ($40.8 billion for schools, another $14 billion for universities and colleges) and community and social services ($21.4 billion), servicing debt rings in as the province’s fourth largest expense.

All the while the government is trumpeting tax cuts amid slow domestic economic growth and external pressures from the U.S.

“Ontario is navigating economic challenges with a pragmatic and prudent fiscal plan,” Ontario finance minister Peter Bethlenfalvy said, adding the government is spending on energy, minerals, infrastructure and technology to strengthen the province’s economy.

“We’re keeping taxes so low, we’ve never raised a tax,” Ford said at an infrastructure funding announcement in Kenilworth last month.

“We will never ever raise a tax,” he added. “I always say, government has a spending problem, they don’t have an income problem.”

Perth-Wellington MPP Matthew Rae told the Advertiser increased personal income tax revenues will help counter “historic” spending.

According to the budget, the government plans on receiving $65 billion in personal income tax in 2026-27, up from $55.7 billion in 2024-25.

Rae defended the spend-heavy budget despite “uncertain economic times” and the government’s mounting debt.

“Cutting taxes is one of the best things we can do for affordability right now,” Rae said, adding the government is “maintaining a responsible path to balance (the budget).”

Finance minister Bethlenfalvy has previously said the books would be back in the black in 2024-25. He then revised that to 2026-27 and again to 2027-28.

Bethlenfalvy now says the province won’t see a surplus until 2028-29.

With significant spending allocated for Toronto-area projects, Rae acknowledged the challenge of standing out among competing interests of other communities.
He added there’s always room for improvement to ensure “rural Ontario gets its fair share.”

First-time home buyer rebate

The government is trumpeting relief for first-time home buyers through a federal-provincial sales tax rebate on new homes valued up to $1.5 million, with a rebate of up to $130,000.

Wellington-Halton Hills MPP Joseph Racinsky said the rebate will help those sidelined by the housing market.

Ford suggested at a March 25 news conference the reprieve will “kick-start the construction of 8,000 additional homes.”

Even so, the budget shows the number of new housing starts expected in the coming three years has been lowered from the government’s earlier projections.

There are 64,800 homes anticipated this year, 70,300 the next, 76,800 in 2028 and 80,500 in 2029 — all below the 150,000 per year required to deliver on the government’s promise of 1.5 million new homes by 2031.

Health, education spending

The budget contains a $1 billion increase, to $29 billion, in spending for hospitals. Home and community care will also see a $1 billion increase, but spread across three years, and has a total of $6 billion budgeted for this fiscal year.

Long-term care spending is being increased by $139 million, with a $9-billion total budgeted.

Rae said health care spending resonates locally, particularly for the long-term care sector and the government’s goal of connecting everyone with a primary care doctor or nurse practitioner.

Rae added he’s working with local family health teams to get provincial dollars into the area for recruiting and keeping physicians and nurse practitioners.

Education spending for elementary and Grade 12 capital and operating expenses is set to increase to almost $41 billion from $38.3 billion.

Other budget highlights

There’s a boost to the Ontario Austin Program of $186 million, bringing spending to $965 million to help pay for support services for families with children under 18 who are diagnosed with autism.

Small businesses can benefit from a reduced corporate income tax, lowered to 2.2% from 3.2%, amounting to around $1 billion saved by small businesses over the next three years.

Racinsky said the cut will be “a huge relief” to small businesses in the Wellington-Halton Hills riding.

“They’re going to reinvest that in their businesses and in the economy,” Racinsky said of local business owners.

The government is trying to ease the impact of rising electricity rates with a $7-billion subsidy, about $36 per hydro bill (based on a monthly use of 700 kilowatt-hours).

The government plans to boost the Community Sport and Recreation Infrastructure Fund, helping to cover recreational facility capital costs, with $300-million over six years.

Over three years, nearly $50 million is allotted for Agricultural Research and Innovation Ontario, including $10.5 million for the new Ontario Poultry Research Centre at the Elora Research Station.

There’s also $100 million planned over two years for the Ontario Municipal Partnership Fund that would bring total funding to $600 million annually to help pay for municipal infrastructure and services.

‘Rural Ontario abandoned’

Guelph MPP and Ontario Green Party Leader Mike Schreiner told the Advertiser the Toronto-centric budget doesn’t include much for struggling families.

Schreiner criticized the government’s priorities, including plans to build a tunnel under Highway 401, a luxury spa at Ontario Place and expanding the Billy Bishop airport.

Health care and education spending falls short, he said, and programs for children with autism have been cut, the Ontario Student Assistance Program has been reduced, and there’s little to attack the housing crisis beyond a tax rebate.

“We clearly have the money if it wasn’t being spent on projects in Toronto,” Schreiner said.

“It would make way more sense to invest in housing that people can afford. That’s the number one driver of the affordability crisis.

“Rural Ontario is abandoned by this government.”

– With files from Joanne Shuttleworth and Ellouise Thompson