The FAO Releases its Fall 2019 Economic and Budget Outlook
The Financial Accountability Office of Ontario’s (FAO) Fall 2019 Economic and Budget Outlook report projects Ontario’s budget deficit will increase to $8.5 billion in 2019-20, up from $7.4 billion last year.
This marks the third consecutive year of higher deficits at a time of steady economic growth.
Over the next four years, the FAO’s baseline projection suggests a rapid improvement in Ontario’s fiscal position, with an almost balanced budget in 2021-22, and a large $8.7 billion surplus by 2023-24.
The government’s plan to limit program spending growth to 1.4 per cent per year on average is primarily driving this budget balance improvement.
Notably, the government’s budget plan includes tax cuts and spending programs that have not been publicly disclosed, according to the FAO.
“If implemented, these unannounced policies would delay the achievement of a balanced budget and result in an additional $13.5 billion in net debt by 2023-24,” says Peter Weltman, Ontario’s Financial Accountibility Officer.
Given the government’s expenditure restraint, the FAO estimates that the demand for public services could exceed the government’s planned spending by approximately $5 billion by 2021-22.
“This presents a risk that the government’s fiscal plan will not provide sufficient resources to meet future ongoing demand for key public services, particularly in the areas of health and education,” says Weltman.