Ontario is projecting a record deficit of $24.7 billion for 2009-10 amid a massive drop in revenues that has prompted a review of government services.
Finance Minister Dwight Duncan blamed the higher-than-expected deficit figure on a 48.1 per cent drop in corporate tax revenues in the face of the recession -- which amounted to a $5.8-billion loss in provincial revenue.
At the same time, the government is increasing its expenditures by $4.8 billion from its March budget to $113.7 billion, amid further investments in skills training, the auto sector, and health care.
That will mean belt-tightening in other areas, said Duncan, although he's not ready to specify what those cuts could be.
"We will call on our partners in the public and the broader public sector to help us sustain public services in the long term," Duncan said in his fall economic update to the legislature Thursday.
"It is incumbent upon all of us to participate in this vital conversation -- to help us build consensus on how to manage through this challenge."
The government is no longer saying the province will return to balanced budgets by 2015, but Duncan announced what he calls a "rigorous strategic spending review" to save money, that will include all agencies, board and commissions.
The government predicts Ontario's gross domestic product will decline 3.5 per cent this year, but will be followed by modest gains of two per cent next year and three per cent in 2011.
"Although there are signs of stabilization in the economy, growth in government revenues and employment will lag behind growth in the economy," Duncan said.
Employment in the province has declined by 205,200 jobs, or three per cent, from a year ago, the statement said, with jobs in the auto sector down by 25.5 per cent over the first nine months in 2009 compared to the same period in 2008.
Details of any possible cuts won't come until the March budget. For now, Premier Dalton McGuinty isn't ruling anything in or our -- even when asked Wednesday if he'd introduce austerity measures similar to those imposed by Bob Rae's government.
The so-called Social Contract included a wage freeze and mandatory unpaid days of leave for civil servants, which became known as "Rae Days."
However, Both McGuinty and Duncan have promised to ensure the key priorities of health care, education and job creation remain sustainable, and said they plan to go ahead with a plan for full-day kindergarten for four and five year olds.
The government will also set aside $650 million in the fight against swine flu.
Ontario is also moving ahead with a plan to merge sales taxes that will provide tax cuts for corporations as well as a reduction for low-wage families -- a move that will reduce tax revenue for the province by $2.3 billion over four years.
NDP critic Michael Prue said he worried what the focus on business tax cuts will do to the average person.
"It's all geared in one direction -- not to the consumer, not to the ordinary person, but to people who already make a lot of money," said Prue.
"He is going to whack ordinary people."
The global recession has led to a near 12 per cent contraction in world trade this year, and reduced Ontario's economy to the same size it was in 2005.
Ontario is now projecting deficits of $21.1 billion in 2010-11 on and $19.4 billion in 2011-12.
The Liberal government originally predicted its books would be balanced when it tabled its 2008 budget, which included an $800-million contingency fund and a boast that "there was no danger" of falling into deficit.
