TORONTO - 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 as the provinces hunker down for a recession.

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 kickstart 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.

Red ink is expected to rain down on most of the provinces this spring as they grapple with a recession that's draining their coffers of tax dollars needed to fund hospitals, schools and other basic services.

British Columbia's recent budget forecast a $495-million deficit for the fiscal year 2009 and $245 million for 2010.

Quebec, Nova Scotia, New Brunswick, and Newfoundland and Labrador have all signalled they are on the brink of falling into deficit, forcing some governments to break election promises to balance the books.

Even oil-rich Alberta is expecting a deficit of more than $1 billion, as years of economic growth come to a crashing halt.

"The fact that even Alberta has slid into a deficit for the current year just gives you an idea of how quickly policy-makers across the country were overwhelmed by the sudden turn of events last fall," said Douglas Porter, deputy chief economist at the Bank of Montreal.

"I do suspect that the vast majority of provinces will be looking at deficits in the coming year. I think surpluses or balanced budgets will be the exception, not the rule, which is a complete turnaround from recent years."

The federal Conservatives, who insisted last fall that Canada was on track to deliver a small surplus, are preparing to rack up deficits totalling $86 billion over the next five years after years of belt-busting surpluses.

Among the provinces, Ontario is expected to have the largest deficit, said Porter, who is predicting a shortfall of more than $10 billion.

It likely won't be known how deeply Ontario will sink into the red until the Liberal government unveils its budget on March 26.

Last fall, Ontario Finance Minister Dwight Duncan predicted a $500-million shortfall, but the government has since left the door open to a much larger sum.

Premier Dalton McGuinty has warned of a "significant" deficit in the upcoming budget, adding that it will take several years for the province's economy to get back on track.

Ontario is already in serious trouble because the ruling Liberals have emptied the province's cupboards, said Progressive Conservative Leader John Tory.

Ontario's revenues have increased by $27 billion since the Liberals took power in 2003, but so has government spending, leaving nothing behind for a rainy day, he said.

"This government has squandered unbelievable wealth, unbelievable amounts of money they had that were created by the good people of Ontario through good times, and all they have to show for it today is what people are saying could be a $10-billion deficit," Tory said.

About 237,400 manufacturing jobs have been lost since 2003, while the number of public servants collecting salaries of $100,000 or more has increased 110 per cent, said Conservative finance critic Tim Hudak.

McGuinty should freeze hiring in the public sector and slash corporate income taxes to 10 per cent if he wants to save the province's economy from irreparable damage, the Opposition said.

The premier defended his record in the provincial legislature Thursday, saying his government has restored confidence in public services like health care while also investing in innovative businesses to spur economic growth.

"I think it's a solid record, and it positions us to withstand the present economic challenges that we're going through together," McGuinty said.

If the premier doesn't turn things around soon, the Liberals will be saddled with the worst financial record since the NDP government of the early 1990s, which racked up a record deficit of $9 billion in its first budget, Hudak said.

"I find it hard to believe that Dalton McGuinty could pass the Bob Rae government for fiscal ineptitude, but boy, he's getting close," he said.

Porter warned Thursday that the current downturn will "climb into the same league" as those of the early 1980s and 1990s, with GDP expected to drop by nearly three per cent.

"While neither the length of the recession nor the drop in GDP is currently projected to be quite as bad as the two previous downturns, there has been a nasty pattern of deep downward revisions to the forecast since the credit crunch kicked into overdrive," he said in a new report.

Things are expected to "bottom out" late this year, and signs of a recovery will emerge in 2010, he added.

Drummond said he's not expecting more than one per cent growth in Ontario in 2010 following a decline of about 2.5 per cent this year, and no significant signs of growth until 2011.