Home Canadian News Ontario’s budget watchdog disputes Ford’s deficit number

Ontario’s budget watchdog disputes Ford’s deficit number

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Ontario’s budget watchdog is painting a rosier picture of the province’s finances by pegging the province’s deficit at more than $1 billion lower than what the government is claiming.
Peter Weltman, the province’s financial accountability officer, released his review of the province’s books on Monday, which shows a $12.3-billion deficit this year. The Ontario government, in contrast, says the budget is $14.5 billion.
Nearly half of that can be attributed to Weltman’s office not including a $1-billion reserve fund. However, the budget watchdog says the remaining $1.2-billion difference is due to the government basing its revenue projections on an overly pessimistic economic forecast.
Even with the slightly lower deficit, Weltman said repeatedly how much it’s grown. In fact, it’s tripled since last year, and climbing out of so steep a hole will be “very challenging,” he said.
“The 2018-19 deficit will be the largest since 2011-12, and (it) results from a significant increase in program spending, combined with a decline in overall revenue,” Weltman said.
Last week, the Toronto Star reported that the province’s chief accountant quit after she refused to sign off on the higher deficit number, saying the Ford government had “materially” overstated the deficit.
The NDP charged that the deficit discrepancy amounted to “fear-mongering” by the new government in its attempt to make the finances look worse than they are.
Weltman also takes issue with the $3.2 billion in savings the government said last month it had already found. In contrast, his office calculated that the Tories have only found $1.7 billion in savings so far, and that the remaining $1.4 billion is a promise to find other efficiencies this year.
The $1.4 billion in efficiencies was booked by the Liberals in the March budget for the same purpose, but was removed by the independent commission of inquiry because it suggested the expected savings weren’t reasonable.
At the time, Finance Minister Vic Fedeli said $1.4 billion in savings wasn’t “real,” but was used to “help boost the numbers” in the March budget.
Fast-forward two months, and Weltman says the Tories have done the same thing, which he says is possible: Because departments can’t overspend their budgets, they often finish the year under-budget.
However, by removing the $1.4 billion in the September deficit number, then adding it back in, the books now look better.
Asked by a reporter if that was a sleight of hand, Weltman said, “You might call it that.”
Still in his statement on Weltman’s report, Fedeli maintained that his government has found $3.2 billion in savings, and suggested he and Weltman are on the same page.
“As we have always said, and as the Financial Accountability Officer confirms, we have inherited a structural deficit from the previous government,” reads the statement.
“The previous government recklessly spent taxpayer dollars, and we must continue to work towards finding efficiencies in order to return to balance in a responsible, pragmatic way.”
Green Party Leader Mike Schreiner is accusing the Tories of repeating the mistakes of the previous Liberal government.
“They overstated the savings they found and they’ve overstated the budget deficit,” he said. “We’re barely six months into a new government, and they’re continuing to play the same kind of political games. I think it’s wrong.”
Ford policies contributing to deteriorating fiscal position: budget watchdog
If the government doesn’t cut program spending, the watchdog’s report shows that Ontario’s deficit will get even bigger because of tax cuts Ford has already introduced.
Should the Tories stick with the status quo, Weltman said the deficit will hit $16 billion by 2022-23.
While that number doesn’t include the savings the government has promised to find but hasn’t yet identified, it also doesn’t include several tax cuts and rebates that Ford promised during the election, but hasn’t yet implemented.
Even without those promised tax cuts, Weltman also said that in order to balance the province’s budget within four years, the government would have to restrain spending to a degree not seen since the Mike Harris government.
He said spending growth will have to be restricted to an average of 1.2 per cent for each of the next four years.
During the election, Ford promised to balance the budget within four years. Since coming to power, though, the Progressive Conservatives have failed to provide any timetable for their plan to get out of the red.
Schreiner warned that “massive cuts” will follow if Ford keeps his promises.
“If the government goes forward with further tax cuts, those cutbacks are only going to become more severe, and will have real implications (for) people’s day-to-day lives,” he said.