Canada’s governments at the provincial, territorial and federal level will record a combined deficit of $3 billion this year, making upcoming budgets the toughest in about a decade, TD Bank said Tuesday.

“There won’t be many big-ticket spending initiatives and tax cuts in this year’s round of budgets,” Derek Burleton, senior economist at TD Bank, said in a news release. “Look for these budgets to be the toughest on record since the deficit-elimination era of the mid-1990s.”

Weaker than expected economic growth, an unanticipated $3 billion plunge in equalization payments to the eight provinces that receive money, and higher than expected spending for health care and disaster relief were the main culprits for knocking governments off track this year, Burleton said.

He also pointed out that some 2003 budgets were formed with overly optimistic assumptions and less than transparent policies.

Newfoundland and Labrador, Nunavut, the Yukon, the Northwest Territories and Prince Edward Island are facing structural deficits above 2% of GDP, the report said.

Ontario, Saskatchewan and New Brunswick are looking at smaller planning shortfalls.

Only Ottawa, Alberta and B.C. are poised to meet their budget targets, according to the TD Report on Canadian Government Finances.

http://www.newswire.ca/en/releases/archive/March2004/16/c0617.html