Ontario’s deficit in 2022-23 will be $1.1 billion lower than forecast three months ago as tax revenues grew faster than rising interest costs on bloated debt Province.
The province’s latest financial disclosure shows the deficit for the year is now $18.8 billion, down $1.1 billion from Ford’s pre-election estimate.
Tax revenues increased by $1.2 billion, while the cost of servicing the province’s $427 billion net debt rose by $105 million due to higher interest rates.
Finance Minister Peter Bethlenfalvy said all of the net new revenue would go into the deficit, with no new funding so far to overcome the current crisis of hospital closures.
“I think it’s important that we have a careful and flexible plan for the future and we have done that in this budget,” Bethlenfalvy said.
All spending is unchanged from the April 28 budget which was formally reintroduced in the Legislative Assembly on Tuesday afternoon, with the exception of a 5% increase in monthly Ontario Disability Support Program payments ( ODSP) promised during the election campaign and a new cash offer for Parents.
The Speech from the Throne also contained a promise of more money for parents of school-aged children.
The province is allocating $225 million to parents to “help their children catch up” on learning impacted by extended school closures during the COVID-19 pandemic.
Using 2021 estimates of similar program spending, the money comes in at between $90 and $100 per child.
A Department of Finance spokesman said the government still does not know whether the money will be passed on to parents as a tax credit or a direct transfer, but Bethlenfalvy called it ” direct payment”.
The two new commitments will be funded from a $1 billion reserve and other contingency funds.
“Parents who know their children best can provide the tutoring type support their children need,” Bethlenfalvy said.
He answered repeated questions from reporters about why ODSP rates could not be increased further given the improved financial situation, since increasing the rate will always leave recipients in poverty.
“I understand the environment is tough and demanding, and that’s why we’ve committed to raising it by 5%, that’s why we’ve committed to adjusting it for inflation, and we’re l one of only three provinces to do so. ”
The collapse of the province’s once-hot housing market is also weighing on the province’s revenue, with land transfer tax revenue expected to be $787 million lower this year than forecast at the end of April.
This decline is more than offset by increased revenue from sales tax, income tax and corporation tax.
Interim NDP Leader Peter Tabuns said the hospital situation and runaway inflation were bad enough that the province had to change its budget.
“Given that inflation has skyrocketed since they filed previously, given the depth of (the hospital) we are facing, they should have changed the budget significantly, they needed a correction trajectory as my colleague said.”