Economist predicts record deficit for Ontario

A senior economist says Ontario could be facing a $15 billion deficit next year.

On March 26, provincial Finance Minister Dwight Duncan will release his 2009 budget, which is expected to predict a budget deficit of about $10 billion.

But TD chief economist Don Drummond says the following year could set a record in the province. Drummond says in 2010 the deficit could grow to $15 billion.

The record for red ink was set by the NDP government of Bob Rae in 1992-93.

That government posted a deficit of just under $12.5 billion.

The planned stimulus package and assistance for the auto industry next year will see the $10 billion shortfall balloon, Drummond predicts.

"I certainly think there will be a year or two where it will hit $15 billion," he said.

Drummond points out that the $15 billion figure will be a smaller percentage of the province's gross domestic product than under the NDP.

Nevertheless, says Drummond, it means the stimulus in the budget will be modest and short-lived. He says Duncan has to control spending

"They're definitely going to be working on a plan to bring those spending growth rates down," he said.

Drummond says the province has been caught in what he calls "a perfect storm" which combines the loss of manufacturing, a slumping American economy and a drop in tax revenues that will take a while to recover.

The Opposition Progressive Conservatives say the province is in serious trouble because the Liberal government has spent the cupboard dry.

They say Premier Dalton McGuinty should freeze hiring in the public sector and slash business taxes to kickstart Ontario's troubled economy before it's too late.

With files from the Canadian Press