Ontario’s 2023 budget release is set for March 23. Will the Ford government finally invest in strengthening programs and services such as health care and education or continue to create chaos while cutting taxes and privatizing health care?
A review of three important financial reports from the Ontario government and the Financial Accountability Office of Ontario, the government’s financial watchdog, show government is squandering windfall taxes, underspending on important services and using the contingency fund to pad the budget, showing smaller than expected deficits.
In short, the Ford administration thinks the Ontario public can be hoodwinked into believing this government has our best interests at heart with decent top-line financial numbers. But lurking just below the surface is a nasty reality that Ford refuses to address.
First, he is squandering windfall tax revenue.
Ontario projects revenues will be $16.6 billion higher than previously projected in the 2022 budget thanks to inflation and faster economic growth. The government will spend $3.4 billion, or 22%, of this windfall mostly on one-time costs associated with ongoing land and land-related claims with Indigenous communities. The other three-quarters, a full $13.2 billion, will be used to decrease the deficit.
None of that $13.2 billion will be used to bridge the shortfalls in health care funding let alone permanently increase funding to raise wages, hire more staff or increase service.
Chart 1: Government leaves $13.2 billion in windfall revenue unspent
Second, Ford isn’t providing enough funding to meet government’s own stated goals.
The Financial Accountability Office found that government needs to spend $5 billion more than planned in the next three years to meet its own health care programming goals, $1.1 billion more to do the same for education and $0.8 billion for justice.
A recent FAO analysis of Ontario’s 3rd quarter financials confirmed that the province spent $6.4 billion less than expected for the first three quarters of the year.
This marks a failure to follow through on commitments made less than a year ago and calls the sincerity of the Ford budget into question.
It is not clear that government will meet their education and justice goals in future years, but I would put hard money on Ford using the additional Federal funds secured last month for health care to meet these goals. They’ll call themselves heroes for securing the additional funding (which was sorely needed) while having the audacity to do so while starving the system themselves.
Third, Ford’s excessive use of contingency funds ($12.5 billion over three years) provides ultimate cover to cut spending by stealth.
Governments of all stripes use contingency funds to pad budgets and show smaller than projected deficits at the end of the year by not spending those funds. This trick has always been frustrating to those of us who track government spending but the Ford government is using this tactic to an outrageous degree.
The FAO analysis shows Ford continues to cut program spending while dumping extra money into the contingency fund. The excess contingency funds makes the topline budget surplus/deficit more palatable while simultaneously cutting program funding dramatically. At the end of the year, when the contingency has not been spent, Ford will take the opportunity to pat himself on the back because he managed the provinces finances so well.
Ford will continue to sow confusion about the financial capacity of the province. Thanks to the great work of the FAO, here’s hoping he won’t get away with it for much longer.