Finance Minister Peter Bethlenfalvy on Wednesday unveiled an update to the province’s finances that shows Ontario taking in more money than planned even since the spring budget — more than keeping up with larger-than-projected expenses and lowering the province’s deficit to $6.6 billion this year, with a projected shortfall of $1.5 billion next year. According to the fall economic statement, Ontario will post a surplus of $900 million in 2026.
For this year, the government now expects to spend $218 billion on revenues of $212 billion.
The fall economic statement also shows that the province’s debt-to-GDP ratio is falling; the next several years will see a lower debt burden than the province has had for much of the past decade. The government’s projections show that, even in a scenario in which the province’s economy grows more slowly than expected, the province’s borrowing will be lower in coming years than it was in 2023.
The relatively healthy state of the province’s financial ledgers is in spite of the fact that the government is spending more than ever before, including on big-ticket highway and transit infrastructure and the previously announced $200 cheques that will be sent to Ontarians, a measure that is expected to cost $3 billion overall.
One area where the government’s finances have gotten slightly worse, however, is the LCBO. The strike by LCBO workers earlier this year and the increased access to beer and wine at corner stores and grocery stores are projected to reduce the LCBO’s revenues this year and next. By 2027, though, the LCBO is projected to see revenues increase by $800 million as it takes a more central role as the wholesaler for a larger alcohol retail market. By 2026, the government expects the LCBO to increase its market share to more than three-quarters of overall sales, in large part thanks to the shrinking role of the Beer Store.
The government expects to spend $500 million less in 2025 and 2026 than it has in the current year on the broadly defined “justice sector,” which includes police, courts, and prisons. This despite the Ford government’s making law and order a key priority in recent months, including by naming a specific minister for auto theft and bail reform. The government says the lower spending in the justice sector reflects a series of one-time investments — in courthouses and information technology — that have concluded.
The projections of the fall economic statement do suggest it will be difficult for the government to meet its housing target of 1.5 million new homes by 2031: Housing starts have been revised downward this year, from nearly 88,000 to 81,300. Starts for next year are also projected to be lower than expected in the spring budget, with a decrease from 92,300 to 86,500. Further in the future, the government projects more robust new construction, in part due to the longer-term effects of lower interest rates from the Bank of Canada.
All the numbers in Wednesday’s fall economic statement could be subject to further revisions, as these numbers themselves are revised projections from the spring budget. The revised $6.6 billion deficit represents a $3 billion improvement in the province’s fiscal balance since just the spring. A revision even half as large between now and the next budget would see the province balance the budget a year earlier than is currently projected — and potentially right before the government calls an early election.
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