Ontario deficit for 2019 falls to $11.7B, surplus by 2023-2024
Chris Herhalt, CP24.com
Published Thursday, April 11, 2019 5:16AM EDT
Last Updated Thursday, April 11, 2019 9:09PM EDT
The Ford government has cut the deficit, from $15 billion to $11.7 billion in its first year, fuelled by rising tax revenue, cuts outside health and education, and attrition in the civil service. However the cuts are blunted by a variety of handouts for working parents, seniors and corporations.
The deficit for 2019-2020 shrinks further to $10.3 billion, with a surplus of $300 million projected by the 2023-2024 fiscal year.
"This is both reasonable and responsible," Finance Minister Vic Fedeli told reporters Thursday. "This is also a budget that includes no new tax increases, not one. In the short time we've been in office the deficit has been reduced by $3.3 billion."
Fedeli was able to come through with both a reduction to the deficit along with tax cuts due to a $4.1 billion increase in personal and sales tax revenues over the past year, roughly 2,000 Ontario public servants who have retired and not been replaced, and plans for $1.7 billion worth of cuts to the justice, post-secondary and social service sectors over the next three years.
For the first time, parents with children in daycare will be able to receive up to $6,000 per child under the age of seven in the form of an income tax credit. Children aged 7 to 16 are eligible for up to $3,750 per year.
The credit is geared to income and families earning more than $150,000 will receive nothing. An average family is expected to receive a credit worth $1,250. The credit will cost the province $390 million per year.
"All of this is done while protecting frontline jobs and our government is investing one of the most flexible childcare programs ever introduced in the province," Fedeli said.
In a bid to keep tax rates for businesses competitive with U.S. states in the wake of the Trump tax cuts, the Ford government plans to spend $1.4 billion in accelerated capital cost and depreciation allowances starting this year, allowing businesses to write off some or all of their purchases on their taxes.
"When we consulted with them, this is what they wanted, they wanted it now," Fedeli said of business groups he met with since taking office.
In addition to an already announced tax credit for minimum wage earners, seniors with low incomes will receive free dental care. Together the measures will cost $585 million this year.
NDP Leader Andrea Horwath said the budget is filled with drastic cuts, and that even in areas where spending improves, the increases do not keep up with inflation.
"We went into this budget expecting deep cuts, but what we didn't expect was the level of irresponsibility and outright cruelty that we see in this budget. Doug Ford is taking away things that you and your family depend on."
Liberal interim leader John Fraser said the budget makes the province's fiscal position look worse than it is.
"Doug Ford has inflated the size of the deficit to create a pretext for cuts, cuts that are going to hurt."
Rules relaxed around alcohol and gambling
In the meantime, those without children in daycare or corporate registrations can take advantage of a broad loosening of alcohol and gambling rules.
For the first time, municipalities will be able to allow drinking in public spaces such as parks.
Bars and restaurants will be able to serve alcohol starting at 9 a.m., any day of the week.
All tax increases planned by the previous Wynne government on beer and wine have been cancelled.
Deep cuts in some areas
The net provincial debt stands at $343 billion this year, and is expected to rise to $382 billion by 2021-2022.
To pay for the new measures and reduce the deficit, spending growth will be constrained or completely cut in almost every ministry.
The health ministry will see spending growth of only nine per cent over the next five years, while education spending will grow by only 1.3 per cent over five years.
"We are looking at every program, every agency, every board, every commission to find efficiencies," Fedeli said, insisting the cuts will not impact quality of services delivered. "Our government has found eight cents on every dollar spent."
But even inside healthcare, steps are being taken to slash costs.
For instance, the province's 35 public health units will be merged into 20, saving $200 million per year by 2021-2022.
Outside of health and education, some of the cuts are bleak.
Indigenous Affairs will be cut nearly in half, down to $74.4 million from $146 million last year.
Municipal Affairs and Housing loses $366 million, going from $1.48 billion to $1.12 billion. Energy, Northern Development and Mines loses $572 million.
The Ministry of Environment's budget shrinks by a third, going from $983 million to $631 million.
"They are cutting everywhere," Horwath said. "This budget is punishing every single Ontarian."
Beyond the more than 3,000 teacher positions to be eliminated over the next four years, an additional 2,000 members of the Ontario Public Service have retired this year and will not be replaced.
Additional civil servants will leave government this year as part of a previously announced voluntary buyout program.
License plates, drivers licences, Ontario branding to change
Ontario's license plates will be changed in the next several years to a blue colour scheme, with a layer of sealant to protect the paint from peeling the way existing license plates once did.
The new plate will say "A Place to Grow" instead of "Yours to Discover."
Both the Liberal and NDP leaders slammed the move, saying the colour change to PC blue was clearly for a partisan reason.
"In 20 years of knocking on doors, nobody has ever asked me about a nicer license plate," Fraser said.
Andrea Horwath went even further.
"I think its kind of shameful that we have a leader who would apply their brand on our license plates," she said. "I think it will cause a lot of rear-ending."
The plate change is part of a wider government re-brand, with the new overall slogan of the government becoming "Working for You."
The redesign of the Ontario logo cost $89,000 and the overall re-branding effort cost $500,000.
Subway upload underway
The Ford government continues to work to upload responsibility for some or all of the Toronto Transit Commission (TTC) subway system from the City of Toronto.
The budget includes $11.2 billion for the four GTA transit projects Premier Ford spoke about Wednesday, and predicts the federal government will be willing to pony up more cash based on the subway's likelihood of reducing greenhouse gas emissions.
The total cost of the four projects: The Downtown Relief Line or "Ontario Line," the Scarborough Subway Extension, the Eglinton West Extension and the Yonge-North subway, will cost $28.5 billion, which the province has committed to covering if other levels of government don’t come to the table.
The budget also details where additional stops will be located on the relief line or "Ontario Line."
The line, which starts at the Ontario Science Centre and heads south to Ontario Place, will include additional stops at Flemingdon Park, Thorncliffe Park, Cosburn, Pape, Gerrard Street, Leslieville, the East Harbour GO station, Sumach Street, Sherbourne Street, Queen Station Osgoode Station, Queen Street and Spadina Avenue, King and Bathurst streets.
On the final page of the 382-page budget, there is a small amendment to provincial law meant to "authorize the Minister of Transportation to appoint inspectors for the purpose of inspecting, auditing, examining, assessing and evaluating transit infrastructure assets held by or behald of the Toronto Transit Commission or the City of Toronto."
A senior official said the provision merely allows provincial staff to enter, inspect and appraise parts of the TTC on an official basis.
But the amendment also allows provincial inspectors to ask "the Superior Court of Justice for an order directing the City or TTC to comply" with its requests, indicating the province is willing to use the courts to counter any resistance to the subway upload plan.
Speaking to reporters after the budget was tabled, Toronto Mayor John Tory said he is pleased the transit funding promised by the PCs has been confirmed, but is “incredibly disappointed” by the elimination of the promised gas tax increase.
“Many of the measures announced are topline commitments or topline indications of future actions and city staff are working to get more information,” he said. “I’m very happy obviously that the billions pledged just yesterday towards GTA and Toronto transit by the province are confirmed in the budget that was tabled this afternoon.”
“Although, as I said yesterday, there remain many unanswered questions as to how that money is going to be invested and discussions will resume late this week and early next.”
Tory said a promised gas tax increase by the provincial government was supposed to be in replacement of imposing road tolls in the city of Toronto. He added that plans for the city were made based off that campaign promise.
“I will say as the mayor of Toronto, and I think you will find that other municipalities are in the same boat, I am incredibly disappointed that the province will not be proceeding with the promised gas tax increase that would have provided the city of Toronto with $1.1 billion over the next 10 years, starting with millions of dollars this year,” he said.
“This was a commitment that was affirmed by the progressive conservative party during the election campaign and we had budgeted, as did other municipalities had I’m sure, for much of that committed increase to go towards the state of good repair for the TTC – subway overhaul, bus overhaul.”
Tory said that transit was “the kind of thing that the gas tax increase, which was to step up over the next few years, was to pay for.”