Ontario on deficit path as revenue picture dims
By Lynne Olver
TORONTO (Reuters) - The Canadian province of Ontario, wounded by the global economic slowdown, expects to swing from a budget surplus to a deficit of C$500 million ($400 million) in the current fiscal year as it projects revenues to be C$918 million less than forecast in March.
The provincial government said on Wednesday that it plans to rein in spending on some programs and cut internal government expenditures to help limit the size of its first budget shortfall in four years.
Measures, such as delaying the hiring of nurses and cutting government travel, should preserve C$108 million in the remaining five months of the fiscal year.
But overall spending in 2008-09 is expected to hit C$96.3 billion, or C$132 million higher than previously planned, due to rising health care-related expenses, it said.
"Economists have been forced by unprecedented economic volatility to dramatically alter their growth projections for the United States, for Canada, for Ontario, and for the world," Finance Minister Dwight Duncan told the provincial legislature in an economic and fiscal update.
Last March, Ontario had expected to balance its books in the 2008-09 year, which ends March 31, 2009, and the Finance Ministry reiterated that view in the summer.
But it is no longer "business as usual," Duncan said.
The province slashed its projection for 2008 economic growth to just 0.1 percent, down from 1.1 percent previously. For 2009, it sees economic growth of 0.7 percent, but did not make any budget projections for 2009-10 or beyond. Continued...