Ontario ended the 2025-26 fiscal year with a $13-billion deficit, outperforming the government’s budget forecast, as spending on health care, education and infrastructure climbed to historic levels amid economic uncertainty and ongoing concerns about the impact of U.S. tariffs.
The province released its final audited financial statements Thursday through the 2025-26 Public Accounts, reporting total program spending of $220.9 billion, an increase of $10 billion, or 4.7 per cent, compared with the previous fiscal year.
“Our government is delivering on our plan to protect Ontario by building the most competitive, resilient and self-reliant economy in the G7,” Treasury Board President Kinga Surma said in a statement.
The government said the improved fiscal outcome was driven by stronger-than-expected tax revenues, increased income from government business enterprises and other non-tax revenue sources.
Deficit improves on budget forecast
Ontario recorded $223.3 billion in total revenue during the fiscal year ending March 31, 2026, down $1.6 billion from the previous year.
According to the province, the decline was largely attributable to a one-time tobacco legal settlement recorded in 2024-25 and lower revenues among broader public-sector organizations. The government also pointed to federal legislation passed in March that accelerated capital cost allowance measures, affecting taxation revenues.
At the same time, Ontario benefited from lower-than-expected debt servicing costs.
Interest and debt servicing charges were $747 million lower than forecast in the 2025 Budget, which the government attributed to lower borrowing costs and higher-than-anticipated revenue from Ontario’s holdings of its own bonds.
Ontario Finance Minister Peter Bethlenfalvy said the results demonstrate what he described as a balanced fiscal approach during a period of economic volatility.
“The 2025-26 Public Accounts show we are taking a prudent, targeted approach to the province’s fiscal plan, while continuing to invest in critical public services and infrastructure,” Bethlenfalvy said.
Health care spending sees largest increase
One of the most significant spending increases came in health care.
The province reported health-sector investments rose by $6.6 billion, or 7.2 per cent, compared to 2024-25. The funding was directed toward hospitals, home care services, long-term care and other health-care initiatives aimed at improving access to care.
Health care continues to account for the largest share of provincial spending, with the government facing persistent pressures from population growth, an aging population and ongoing demands on hospitals and long-term care facilities.
Education spending also increased substantially.
The province invested an additional $2.3 billion, representing a 6.1 per cent increase, supporting child-care initiatives, school renewal projects, repairs and the construction of new schools and expansions.
Meanwhile, infrastructure spending rose by $1.9 billion, funding projects including hospitals, public transit, highways, broadband expansion and housing-enabling infrastructure. The government has repeatedly argued that major infrastructure investments are necessary to accommodate Ontario’s rapidly growing population while supporting economic growth.
Government highlights tax relief and infrastructure plan
Alongside increased spending, the province emphasized what it described as ongoing taxpayer relief measures.
Ontario says it continues to reduce the tax and fee burden on individuals and businesses by approximately $12 billion annually.
The government also highlighted its long-term infrastructure strategy, pointing to its $236-billion capital plan, which includes investments in transportation, health care facilities, schools and other public assets.
The release comes as the province continues to position itself against economic risks, including potential U.S. trade actions and tariff disputes that government officials argue could affect investment and employment.
Questions remain about long-term spending pressures
The Public Accounts release follows a report issued Wednesday by Ontario’s Financial Accountability Office (FAO), which examined ministry spending plans outlined in the 2026 Ontario Budget.
The watchdog reviewed spending projections for the ministries responsible for health, long-term care, education, children and social services, and post-secondary education. Together, those sectors account for roughly 73 per cent of planned provincial spending.
The FAO’s reports compared government spending plans with historical expenditures and the office’s own estimates of funding required to maintain current service levels, providing an independent assessment of whether future expenditures will keep pace with growing demand.
The reports come as policy experts continue to scrutinize whether planned spending increases will be sufficient to address ongoing pressures in hospitals, schools, long-term care homes and social services.
Looking ahead, the Ford government is expected to provide a fresh economic and fiscal update when it releases the 2026 Ontario Economic Outlook and Fiscal Review, commonly known as the Fall Economic Statement, on or before Nov. 15.
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