2014 Ontario Economic Outlook and Fiscal Review
Chapter III: Fiscal Outlook

Section B: 2014–15 Fiscal Performance

The deficit for 2014–15 is currently projected to be $12.5 billion, unchanged from the 2014 Budget forecast.

The Province's total revenue projection for 2014–15 of $118,362 million is $509 million lower than the 2014 Budget forecast, largely reflecting a lower-than-projected level of tax revenue in 2013–14 that carries forward over the medium term, as well as a one-time decline in Corporations Tax revenue related to assessments for prior years.

The 2014–15 total expense outlook is $208 million lower than the projection in the 2014 Budget. This is due to lower-than-forecast interest on debt expense, resulting primarily from lower-than-forecast interest rates and a one-time gain from the sale of asset-backed commercial paper that was written down in prior fiscal years. Projected program expense is essentially unchanged from the 2014 Budget, reflecting the government's commitment to manage spending and ensure every dollar counts.

The 2014 Budget included a $1 billion reserve in 2014–15 to protect against adverse changes in the Province's revenue and expense. Consistent with this, the reserve is being reduced by $300 million to mitigate the remaining impact of the decline in the revenue outlook. This maintains a reserve of $700 million in 2014–15.

TABLE 3.1 2014–15 In-Year Fiscal Performance
($ Millions)
  Budget Plan Current Outlook In-Year Change
Revenue 118,871 118,362 (509)
Expense      
Programs 119,366 119,374 8
Interest on Debt 11,010 10,794 (216)
Total Expense 130,376 130,168 (208)
Reserve 1,000 700 (300)
Surplus/(Deficit) (12,505) (12,507) (1)
Note: Numbers may not add due to rounding.

2014–15 Revenue Changes since the 2014 Budget

The 2014–15 revenue projection of $118,362 million is $509 million below the 2014 Budget outlook, largely reflecting a lower level of tax revenue in 2013–14 as well as a one-time decline in Corporations Tax revenue related to assessments for prior years. The impact of the lower 2013–14 tax revenue base extends over the medium term. The outlook for Income from Government Business Enterprises and for Other Non-Tax Revenue is unchanged from the 2014 Budget outlook.

TABLE 3.2 Summary of Revenue Changes since the 2014 Budget
($ Millions)
    2014–15
Taxation    
Corporations Tax (398)  
Personal Income Tax (87)  
Sales Tax (51)  
Ontario Health Premium 20  
Total Taxation   (517)
Government of Canada   8
Total Revenue Changes since the 2014 Budget   (509)
Note: Numbers may not add due to rounding.

Details of 2014–15 In-Year Revenue Changes

Key changes to revenue projections since the 2014 Budget include the following:

  • Corporations Tax revenue is down $398 million, mostly because tax assessments for 2012 and earlier years are lower than estimated at the time of the 2014 Budget. These prior-year variances have a one-time impact.
  • Personal Income Tax revenue is down $87 million, due to lower 2013 tax revenue of $227 million based on tax returns processed since the 2014 Budget, partially offset by a one-time prior-year adjustment of $140 million.
  • Sales Tax revenue is $51 million lower, mostly due to a lower estimate of Ontario's Harmonized Sales Tax (HST) entitlement for 2014, provided by the federal government in June 2014.
  • Ontario Health Premium revenue is projected to be up $20 million, as a result of a one-time prior-year adjustment of $28 million, partially offset by lower tax revenue of $8 million based on tax returns processed since the 2014 Budget.
  • Government of Canada transfers are $8.3 million higher, due to the extension of the Targeted Initiative for Older Workers program, with a corresponding increase in expense.

2014–15 Expense Changes since the 2014 Budget

The 2014–15 total expense outlook, at $130,168 million, is $208 million lower than the projection in the 2014 Budget.

TABLE 3.3 Summary of Expense Changes since the 2014 Budget
($ Millions)
  2014–15
Program Expense Changes  
Emergency Forest Firefighting 15.0
Targeted Initiative for Older Workers 8.3
Funding to Support Ebola Containment 3.0
400th Anniversary of the Francophone Presence in Ontario 1.1
Other Program Expense (1.1)
Contingency Fund (18.0)
Total Program Expense Changes 8.3
Interest on Debt (215.9)
Total Expense Changes since the 2014 Budget (207.6)
Note: Numbers may not add due to rounding.

Details of 2014–15 In-Year Expense Changes

Key changes to expense projections since the 2014 Budget with offsets from the Contingency Funds include:

  • An increase of $15.0 million to support emergency forest firefighting activities until the end of the 2014 fire season.
  • An increase of $3.0 million to help front-line responders contain the Ebola outbreak in West Africa.

Other key changes to expense projections since the 2014 Budget include:

  • An increase of $1.1 million to support cultural celebrations marking the 400th anniversary of the Francophone presence in Ontario, offset by a transfer from the Ministry of Finance.
  • An increase of $8.3 million for the Targeted Initiative for Older Workers program, offset by federal funding to extend the program
  • Interest on debt expense is $215.9 million lower than forecast in the 2014 Budget. This reduction is primarily the result of lower-than-forecast interest rates and a one-time gain from the sale of asset-backed commercial paper that was written down in prior fiscal years.