Ontario managed to lower its deficit to $10.5 billion last year despite a sharp drop in tax revenues but only by tapping a $1 billion reserve fund to dilute the red ink, Finance Minister Charles Sousa said Monday.
The deficit figure is $800 million lower than Sousa forecast in his May budget that sparked the spring election campaign.
“It’s there as a result of being cautious,” he insisted, boasting it’s the fifth consecutive year the Liberal government has brought in a lower deficit.
However, revenues were $900 million lower than projected, offset by expenses that were $1.2 billion lower than the forecast in his 2013 budget.
Progressive Conservative MPP Vic Fedeli said the Liberals have again “overestimated their projections” in order to make the fiscal situation seem more rosy than it is.
“What we’ve really seen is a Shania Twain song: Up, up. We’ve seen the deficit go from $9.2 billion to $10.5 billion, forecast to go to $12.5 billion next year. All up, going the wrong way,” said Fedeli (Nipissing).
New Democrat MPP Catherine Fife (Kitchener-Waterloo) said the disappointing revenue numbers prove Queen’s Park needs to raise corporate income taxes.
“We did propose a 1 per cent increase in corporate taxes in our (June 12 election) platform,” said Fife.
“The corporate tax loopholes continue. Everyday Ontarians are paying more — we want to see a solid plan to ensure that corporations are paying their fair share as well.”
Conservatives have been skeptical of the government’s promise to eliminate the deficit by the 2017-18 fiscal year, saying it is a tall order.
Sousa said the government is keeping a close eye on the books, managing expenses tightly, looking at “repurposing” government assets and new measures to crack down on the underground economy.
“We’re trying to avoid one-times sales (of assets) . . . and maximize the dividends, he told reporters.
The first government asset on the block is the prime waterfront LCBO lot in downtown Toronto.
Expenses were cut in part by freezing “non-essential” spending in the final quarter of the fiscal year that ended on March 31. Sousa blamed slower-than-projected economic growth and a decline in federal transfer payments for the lower revenue figure.