There are new predictions that Ontario’s deficit could climb as high as $18 billion over two years, leading a tide of red ink that’s expected to wash over Canada.
TD chief economist Don Drummond said Thursday he’s expecting Ontario to run a deficit of about $5 billion in the current fiscal year ending March 31 and another $13 billion in the next.
Previous estimates had pegged the province’s deficit between $5 billion and $10 billion, taking into account its promises to bail out struggling automakers and match federal dollars for infrastructure projects meant to kick-start the ailing economy.
Plunging tax revenues coupled with increased spending on health care and infrastructure will put a big squeeze on the province’s finances, Drummond said.
“You have a dramatically weakening Ontario economy, which is hitting their revenues, and at the same time, their spending continues to go up — again, largely driven by health care but certainly some contribution from infrastructure,” Drummond said.