Ontario’s budget shortfall is projected to more than triple in the coming fiscal year, as the government of the most populous Canadian province delays its goal of balancing its budget by another year.

The provincial deficit is expected to be $9.8 billion (US$7.2 billion) in the fiscal year that starts April 1 — the biggest shortfall since the early days of the pandemic. Ontario is projecting a $3 billion deficit for the current fiscal year, which ends Sunday.

The province is following Quebec and British Columbia in planning for swelling deficits ahead as higher interest rates and slower economic growth weigh on tax revenue. Still, Premier Doug Ford’s government underlined that it’s trying to address gaps in areas such as health care and housing.

Ontario Finance Minister Peter Bethlenfalvy said the province isn’t immune to global forces that are slowing economic growth. The government now expects to balance its budget in fiscal 2026-27, a year later than its guidance in November.

 “We’re still committed to our path to balance and at the same time we’re able to invest in people and building things in our economy,” he said in a media briefing in Toronto. “I just believe that those are going pay off.”

High interest rates will continue to weigh on Ontario’s economy, with the government anticipating a 0.3 per cent increase in gross domestic product this year — a quarter of the growth seen in 2023. That trend is expected to turn around next year, with a 1.9 per cent expansion.

Until then, the slump is expected to limit revenue growth in a province that accounts for nearly 40 per cent of Canada’s population and more than a third of its economic output. 

Ontario forecasts revenue of $205.7 billion for the next fiscal year — up 0.7 per cent from the prior period. Meanwhile, planned expenses are projected to rise 3.5 per cent to $214.5 billion.

“The road ahead will be challenging as the province seeks to balance expenditure control and debt sustainability with the needs of a fast-growing and rapidly aging population,” Desjardins economist Marc Desormeaux said.

Even with a larger shortfall and a softer economic outlook, the Ford government plans to put more spending toward infrastructure. One of the top priorities is housing, supported by a three-year, $1.8 billion investment in a municipal housing infrastructure program announced last week.

The government plans to invest $546 million over three years to expand on primary-care teams. The budget also includes auto insurance reforms and funding to combat a spate of recent car thefts in Toronto.