Ontario is in back in the black, according to the province’s independent fiscal watchdog.
The Financial Accountability Office (FAO) issued a report Thursday that projects Premier Doug Ford’s Progressive Conservatives will have budget surpluses this fiscal year and through 2027-28.
That will put pressure on the Tories to loosen the purse strings amid contract negotiations with public-sector unions representing workers such as teachers and education support staff.
“With a strong economy driving extraordinary revenue growth, the province recorded a $2.1-billion budget surplus in 2021-22,” the FAO said in a new 12-page report.
That’s just the ninth budget surplus in more than forty years — the most recent one was under finance minister Charles Sousa in 2017 when Liberal Kathleen Wynne was premier.
“This surplus was a sharp reversal from the deficits projected by both the FAO and the government,” the report said.
“The 2021-22 budget surplus primarily reflected extraordinary growth in revenue as strong employment growth and high inflation pushed up incomes, household spending and tax revenues,” it continued.
Indeed, last year, the PC government saw an increase in tax revenues of $20.8 billion, which is a greater gain in one year than the tally of the previous five years.
“While revenue growth is projected to slow from its current pace, it will continue to outpace program spending increases … leading to growing budget surpluses from ($100 million) in 2022-23 to $8.5 billion in 2027-28,” the report said.
“These surpluses are a substantial improvement compared to the deficits forecast in the 2022 Ontario budget,” it noted.
“Ontario’s economy expanded rapidly in 2021 and 2022 as the province recovered from the pandemic.”
If current trends continue, the province’s net debt-to-gross domestic product ration is expected to plunge from 39.2 per cent last year to 30.5 per cent in 2027-28, the lowest since Liberal premier Dalton McGuinty was in office in 2008-09.
The FAO report comes ahead of Finance Minister Peter Bethlenfalvy’s fall economic statement that will be delivered within the next three weeks.
Bethlenfalvy is expected to address the watchdog’s findings later Thursday.
Last month, the treasurer revealed a surprise $2.1 budget surplus, which forced him to cancel an annual pay hike of almost $26,000 for MPPs that would have been triggered by legislation McGuinty passed in 2009 that froze their wages.
“With workers and families struggling with increased costs, now is not the time for politicians to be receiving raises,” Bethlenfalvy said on Sept. 23.
In his most recent budget — tabled in April before the June 2 election then reintroduced in August — he had forecast a deficit of $13.5 billion.
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