Ontario trims deficit, ups health, education funds

Tue Mar 29, 2011 6:16pm EDT
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By Claire Sibonney

TORONTO (Reuters) - Ontario's Liberal government said on Tuesday a tight cap on spending will keep it on track to balance the provincial budget by 2017-18, even as it boosts education and health care funding in hopes of winning reelection.

Finance Minister Dwight Duncan forecast that Ontario, which has the largest economy and population of any Canadian province, will run a deficit of C$16.3 billion for the 2011-12 fiscal year.

This marks a decline from a record C$19.3 billion two years earlier, when its manufacturing-oriented economy was ravaged by the global financial crisis.

The spending plan is being closely watched by domestic and international investors, who have scooped up the province's bonds, but also expressed concerns about the province's growing debt pile.

The Liberals are also under pressure from the opposition Progressive Conservatives, who have capitalized on the anger of some voters about higher electricity costs, changes to the province's sales tax and rising government spending.

"The 2011 budget builds on the government's plan to eliminate the deficit and at the same time protect education and health care," Duncan told reporters.

Ontario's ruling Liberal party, reelected with a majority in 2007, has sought to revive the province's economy partly through initiatives like improving infrastructure and expanding green power, as well as increasing spending on education and health care.

The province said its total expenses will be C$124.1 billion in the coming fiscal year, up from C$122.9 billion in 2010-11.   Continued...

<p>Ontario Finance Minister Dwight Duncan speaks beside Ontario Premier Dalton McGuinty during question period at Queen's Park in Toronto, March 2, 2011. REUTERS/Mark Blinch</p>