Legislative assembly for the province of Ontario seen in May 2017. (David Whelan/Public Domain)
Ontario is forecasting a $13.8 billion deficit for the coming fiscal year and and has pushed back its timeline to balance the budget to 2028-2029.
This marks an increase from the projected deficit of $7.8 billion for the 2026-27 period that was outlined in last year’s budget.
Finance Minister Peter Bethlenfalvy attributed the heightened spending to “significant change in the world around us” as he presented the budget on March 26.
“Geopolitical forces that may have once felt distant have now reached our shores,” he told the legislature in Toronto. “Global economic and trade tensions, supply chain disruptions, shifting markets. Simply put—the world has changed, and we must change with it.”
Bethlenfalvy described the budget as “prudent” despite the increase, but noted that it also boosts spending for provincial priorities such as billions of dollars in tax breaks for buyers of new homes and small businesses.
The $244.2 billion budget also lays out new spending for post-secondary education and health care, as well as significant spending on infrastructure, high-growth industries, and research.
The spending increase means the government’s commitment to reach a balanced budget has been pushed to 2028-2029, compared to its previous goal of 2027-2028. Ontario now expects to have a $6.1 billion shortfall in the next fiscal year.
This move marks the fourth consecutive time the government has pushed back its balanced budget timeline.
Bethlenfalvy described the rise in spending as recognizing “the moment we’re in.”
“Look across all the provinces in Canada, virtually every one of them has increased their deficits,” he said.
Provinces across Canada, including British Columbia, Alberta, Quebec, Nova Scotia, and Prince Edward Island, are all projecting deficits—some worse than previously expected. B.C. is facing a record $13.3 billion deficit, while Alberta’s came in at $9.4 billion, and Quebec’s at $8.6 billion.
This trend of “red ink” is largely driven by a combination of high economic uncertainty, trade disruptions, falling resource revenues, and rising operational costs in areas like health care, according to a report from The Fraser Institute.
Health Care and Education
The budget expands Ontario’s four-year investment in the Primary Care Action Plan to $3.4 billion from 2025 to 2029, to support the province’s strategy to connect every person in Ontario with a family doctor or primary care provider.
The province has also pledged an additional $1.1 billion for hospitals—a 4 percent increase—at a time when many are facing service reductions and operating deficits. The Ontario Hospital Association thanked the government in a statement for the funding increase, but the organization has previously said it needs more than double this amount to function properly.
Home and community health-care services also received $1.1 billion in funding. The money will be allocated over a span of three years to expand home and community health-care services delivered by nurses, personal support workers, and therapists.
An additional $186 million in new funding has been designated for the Ontario Autism Program, aiming to allow a greater number of children to access clinical services for autism care.
The budget boosts education funding from $39 billion to nearly $41 billion for the current year for the Kindergarten to Grade 12 sector, aiming for $41.5 billion by 2028-29. That includes $30 billion over 10 years for school infrastructure, with $22 billion earmarked for new and expanded schools.
The budget directs $14 billion toward the post-secondary sector, which includes a $6.4 billion funding boost over four years to address financial pressures in the sector. It also raises annual operating funding by 30 percent to $7 billion, funds 70,000 more “in-demand seats,” and caps tuition at 2 percent annually.
Tax Breaks
One of the biggest tax breaks in the budget was announced by Ontario Premier Doug Ford earlier in the week. He told a March 25 press conference that his government planned to temporarily remove the HST from the cost of new homes.
The budget confirmed that the full 13 percent tax will be eliminated for new homes worth up to $1 million from April 1, 2026, through March 31, 2027.
Homes valued between $1 million and $1.5 million will be eligible for the maximum rebate of $130,000. The rebate will decrease proportionally for homes valued at up to $1.85 million.
The budget confirmed the program will cost the province $1.4 billion, but noted it will help boost home sales. It projected resales would grow 9.1 percent in 2026 and 5.6 percent in 2027.
Small businesses will experience a reduction in corporate income tax by 30 percent, decreasing from 3.2 percent to 2.2 percent effective July 1. The government says the cut will benefit more than 375,000 small businesses in the province, resulting in an estimated savings of $1.1 billion over a three-year period.
The province has also committed to making its earlier reductions in gasoline and fuel taxes permanent, a decision it claims has offered approximately $2.1 billion in relief since 2022.
New Industry
The budget maintains the majority of the commitments outlined in last year’s budget, which are directed at countering U.S. tariffs through infrastructure investments and large allocations meant to aid workers and businesses.
One component of the province’s strategy for the future will focus on investing in new technologies and industries that promote its “long-term economic and strategic priorities,” according to a government press release announcing budget initiatives.
That strategy includes the establishment of a $4 billion “Protect Ontario Account Investment Fund.” The fund pledges as much as $4 billion for key economic pillars, such as defence, data centres, and technology companies, through a private investment manager, while the province will act as a “limited partner,” a method that is not typically employed by the province.
Bethlenfalvy underscored the need for rigorous oversight of the fund to guarantee that investments continue to align with provincial priorities and to preserve intellectual property and high-value technology jobs in Ontario.
“We’ve got some of the greatest minds on the planet in technology right here in Ontario,” Bethlenfalvy told reporters when asked about the program. “We provide a lot of funding for research, come up with great patents and intellectual property, and then investors come from around the world and buy up those patents, and move the offices to wherever, to the U.S., set up in Silicon Valley, move out of town. I want that to stay here in Ontario.”
The government is pledging an additional $107 million over three years, starting in 2026-27, to renew its support for the Critical Technologies Initiatives program
This funding is intended to expedite the development, commercialization, and adoption of critical technologies, with an emphasis on artificial intelligence (AI), life sciences, advanced manufacturing, quantum technologies and automotive and mining technologies.
Opposition Criticism
NDP Leader Marit Stiles said the budget from Ford’s government “fails the test again” when it comes to affordability measures.
The party released its 2026 Budget Report Card after the late afternoon delivery of the document at Queen’s Park. Stiles said Ford’s government deserves an “F” for failing “the test to meet Ontario’s priorities.”
“Young people and families are struggling with sky-high rents, fewer opportunities, and soaring costs,” the Opposition leader said in a statement on the NDP website. “Budget 2026 was an opportunity to deliver hope and relief for our province during a difficult moment.”
Liberal Parliamentary Leader John Fraser said in an X post that the budget—dubbed A Plan to Protect Ontario—fails to live up to its namesake.
“The most important thing to families right now is affordability,” Fraser said in a subsequent video post. “There’s nothing in this budget. No HST cut for home energy costs even though energy prices are going up. There’s nothing in here that’s going to make class sizes smaller. There’s nothing in here that’s going to help kids with special education needs.”
Ford also posted on social media, describing the budget as a plan that delivers on the government’s promise “to build the most competitive, resilient and self-reliant economy in the G7.”
“We’re cutting taxes on homes and small businesses, investing in infrastructure, health care and education, and protecting Ontario workers from tariffs and economic uncertainty,” he said on X.
Other Key Takeaways
One of Ford’s more controversial plans—the construction of a tunnel under Highway 401 in the Toronto region—was also mentioned in the budget. It confirmed that fieldwork for the feasibility study on the proposed tunnel will begin this spring.
The study forms part of the government’s strategy to evaluate a multi-level tunnel that spans more than 50 kilometres to connect Brampton/Mississauga to Markham/Scarborough, in a bid to address intense traffic congestion along the 401 corridor.
The province has awarded a $9.1 million contract to WSP Canada Inc. to conduct the feasibility study with results not expected until 2027.
The province is also forecasting a $32.5 million in funding in 2026-2027 for border security. The funds will be used to acquire drones, marine vessels, and surveillance technologies, as well as to establish a Border Integrity Investigation Fund.
The program will provide targeted operational funding to police services to address border‑related enforcement gaps, with an emphasis on unmonitored general aviation fields and other vulnerable entry points.