Ontario’s deficit for 2003-04 has come in at $5.5 billion – better than the anticipated worst-case scenario of $6.2 billion, but down only marginally from what the Liberal government expected it to be.

“The actual deficit for 2003-04, as verified by the provincial auditor, was $5.5 billion — $5.5 billion more than the previous government said it would be,” Finance Minister Greg Sorbara said yesterday. “We continue to face substantial financial challenges and risks because of the previous government allowed spending to grow rapidly rapid growth in spending over the last few years without similar growth in taxation revenues .”

Revenues were $5.7 billion lower than expected in the previous administration’s 2003-04 Budget plan while expenses were $747 million higher. A budgetary reserve of $1 billion covered part of these changes from the plan.

Taxation revenues in 2003-04 were $2.5 billion lower than expected due to weak economic growth. Income from investment in government business enterprises was $1.3 billion lower than expected mainly related to lower net income from Ontario Power Generation Inc. and the Ontario Lottery and Gaming Corporation. Revenue from sales and rentals was $1.7 billion lower than expected as most of the income from commercialization of government enterprises included in the 2003-04 Budget did not materialize.

” Phantom asset sales came home to roost for the previous government, leaving a gaping hole in revenues,” said Sorbara. “By introducing the Fiscal Transparency and Accountability Act, we will ensure that no government can hide deficits with these kind of deceptive practices again. “

Transfers from the federal government provided some relief as they increased by $1 billion in 2003-04 as a result of federal support for a wide range of provincial programs and policy initiatives, largely in the health care sector. For example, the federal government provided $387 million in 2003-04 for health care reform and $330 million for SARS compensation.

During the past 10 years, provincial spending has been growing much more quickly than revenue. In the last five years, program spending has increased by $13.9 billion or 29% while tax revenues have increased by only $2.2 billion or 5%.

“Since this mess was 10 years in the making, it will take time to clean it up,” said Sorbara. “We have begun with a responsible four-year plan to bring the province back to financial health. Our government is keeping its commitment to accountability, transparency and fiscal responsibility, while delivering the services we promised to Ontarians. “

The 2003-04 projected deficit was estimated at $5.6 billion in the Report on the Review of the 2003-04 Fiscal Outlook prepared by Erik Peters in October 2003. The report stated that he rapid growth in spending over the period, without a similar growth in taxation revenues had created a significant risk for future fiscal planning.