TORONTO (Reuters) - New figures point to a smaller Ontario budget deficit for 2010-11 and a tiny reduction in the shortfall for the following year as the provincial government curbs costs ahead of a tight race for the October 6 election.
The government of Canada's most populous province said the deficit was C$14 billion for the fiscal year to March 31, down from C$16.7 million forecast in the March budget.
It also expects a 2011-12 deficit of C$16 billion, down from its March estimate of C$16.3 billion, largely due to repayments of aid given to the auto industry during the recession.
The province expects to return to balance by 2017-18.
"We have found a way to ratchet our expenses down in a way that does not compromise the programs that families have got to be able to count on," Premier Dalton McGuinty told reporters on Tuesday, noting his ruling Liberal government's promise to protect healthcare and education spending.
McGuinty added that only C$300 million of the C$2.7 billion in budget improvements from last fiscal year came from increased revenues.
He said the province, which is the country's manufacturing and financial heartland, was also monitoring global economic turbulence closely, including fears of a new recession in the United States, Canada's largest trading partner.
Ontario's latest public account numbers show the provincial debt rose by C$24.5 billion in 2010-11 to C$236.6 billion. The province's ratio of net debt to GDP for 2010-11 was 34.9 percent.
The financial update comes on the heels of a public opinion poll earlier this month that showed McGuinty's Liberals closing in on the opposition Progressive Conservatives.
The Conservatives, led by Tim Hudak, have promised to cut taxes and scrap big premiums for green energy, while still paying more for health and education and wiping out the deficit.
Reporting by Claire Sibonney; editing by Rob Wilson