What to watch out for in Doug Ford’s first provincial budget

PC Premier Doug Ford will release his government’s first budget Thursday afternoon, a document that will pit his party’s promise to erase a large deficit against a raft of pledges he made last year to cut costs for motorists, business owners, families with small children and middle and low income earners.

The deficit:

Fedeli says the provincial deficit was $13.5 billion for 2018-2019, while the Financial Accountability Office (FAO), a non-partisan legislative office set up early in the Wynne era, says the deficit for that period is actually $12.3 billion. The FAO says the difference between its lower deficit number and Fedeli’s is explained by the fact the PCs include annual (unspent) reserve funds as part of the deficit and rely on more pessimistic assumptions of future economic growth.

Whatever the deficit actually is, Ford pledged in his platform to “return to a balanced budget on a responsible time frame.” Last November, Ford told party members during an annual convention that it may take his entire first mandate — until 2022 — to balance the budget. More recently, Fedeli told a crowd of Toronto businesspeople that the return to balance would be “thoughtful” and not “at the expense of critical programs.”

The FAO says that in order to balance the budget by 2022, annual spending could not increase beyond 1.2 per cent, a rate that would be below the rate of inflation for the last several years. That slowing of spending growth hasn’t been achieved in Ontario since the Mike Harris government of 1995-1999, when schools, hospitals, social services and universities endured significant cutbacks.

Class sizes, kindergarten and online learning:

Education Minister Lisa Thompson has already announced that Ontario schools will have fewer early childhood educators, slightly larger class sizes from grades 4 to 8, and significantly larger class sizes for grades 9 to 12. There will also be an increased emphasis on online learning for high schoolers, with four of the thirty required credits to be delivered online by 2021. The non-partisan education think tank People For Education says that these changes will save the province $987 million per year, along with the loss of as many as 9,200 teaching and other jobs lost. Thompson says losses will be achieved through attrition, but there are reports that Ontario school boards are beginning to issue layoff notices ahead of next school year.

Ford promised raft of tax cuts, credits:

Just four months into their mandate, Ford and Fedeli cancelled a Liberal surtax on personal incomes of more than $70,000, and introduced a promised tax credit for minimum wage earners instead of allowing the minimum wage to rise from $14 to $15 per hour. The FAO says these measures will cost the treasury at least $472 million this year. But they promised even more during the 2018 campaign. Ford offered voters a refundable tax credit for childcare costs, at an estimated cost of $389 million per year. He also pledged to lower gasoline prices by 10 cents per litre, partially through ending cap and trade, at a cost of $1.2 billion per year. He also promises to reduce corporate and small business income taxes to the tune of $1.36 billion per year.

All this money has to come from somewhere, and Ford has suggested it will come from “efficiencies” at government ministries representing four per cent of spending, or as much as $6 billion per year.

Transit upload unclear:

Last week, CTV News Toronto reported that the Ford government is budgeting as much as $25 billion dollars to continue four priority transit projects in the GTA as part of their plan to upload responsibility for part or all of the Toronto Transit Commission. The four projects are the Scarborough Subway Extension, the Eglinton West or Eglinton Crosstown Extension, the Downtown Relief Line and the Yonge North Subway Extension to Markham.

Ford has said the province has greater powers to borrow to finance the projects and amortize them over a longer period, but there is no definitive word on whether the upload and possible changes to each project’s design will delay their construction. Toronto Mayor John Tory and senior city staff say that changes to the Scarborough Subway Extension and the Eglinton West Extension will result in delays. The city also says it has spent $224 million designing these transit projects, and at least some of that work will be have to be done again if the projects are significantly altered.

Hydro:

Ford’s campaign platform called for residential and some commercial power bills to fall by 12 per cent on average. So far, they’ve held future rate increases to the rate of inflation. The PCs have also scrapped the Green Energy Act and the Fair Hydro Plan, ending many incentives for renewable energy development and stopping the Liberal practice of using borrowed money to cover a portion of residential energy bills. - cp24