A decade ago, a $14.6 billion deficit would have been politically fatal for any Progressive Conservative government. Finance Minister Peter Bethlenfalvy did not flinch. He presented it not as a problem but as a choice: the cost of building infrastructure today that Ontario would otherwise not have. The 2025-26 projection is larger than the province spends on post-secondary education in a year.
That framing sounds reasonable. The details tell a more complicated story.
Where the Money Goes
Capital spending. Nuclear refurbishments, 400-series highway expansions, transit lines. All of it front-loads costs years before it generates anything. Governments borrow to build long-lived assets all the time, and nobody objects in principle.
But the deficit also reflects weaker-than-expected revenue: corporate tax receipts came in below forecast as business investment softened, and land transfer tax fell with the sluggish resale housing market. Even without the capital push, the province would have run a deficit in 2025.
The government’s own numbers say so.
The budget says balance by 2027-28. That target has slipped before; the same projection appeared in the 2023 and 2024 budgets and was missed both times.
Third time’s the charm, presumably. The Parliamentary Budget Officer’s analysis suggests 2028-29 or later is more realistic under current spending trajectories.
Nuclear as Industrial Policy
$3.8 billion in additional provincial support for the Pickering nuclear restart. Biggest single new commitment in the budget, on top of existing Darlington refurbishment funding. That is a lot of money on one bet.
The economics make sense, though. Ontario’s grid is already majority nuclear, Darlington and Pickering are sunk-cost infrastructure that runs cheaply once refurbished, and the province will need more baseload power as EVs and heat pumps push demand up through the 2030s. Buying hydro from Quebec is the obvious alternative, but that comes with its own politics and its own infrastructure bill.
The risk is the usual one with nuclear: cost overruns. OPG’s Darlington refurbishment has run roughly on schedule (genuinely unusual for major nuclear work anywhere in the world), but Pickering is a different reactor design and a harder job.
Nuclear cost escalation is the norm, not the exception.
The budget assumes OPG’s numbers hold. They might not.
The Transit-Shaped Hole
Toronto’s transit funding is the most notable absence. The province and city have been in an extended standoff over capital contributions to the subway expansion program, and the budget includes no new transit transfers beyond what was already committed. A roughly $4 billion shortfall over the next decade for transit projects already underway. (Nobody at city hall wants to say that number out loud.) Without provincial funding, Toronto faces property tax increases, service deferrals, or further debt.
Mayor Olivia Chow has been public about the gap. Premier Ford has been equally public that the city should find efficiencies first. Part posturing, part real disagreement about who pays for subways that primarily benefit Toronto residents. Either way, construction timelines for the Eglinton Crosstown extension and the Ontario Line may stretch further than currently advertised.
The Opposition Response
The NDP zeroed in on housing: zero meaningful new investment in non-market housing. Zero. NDP leader Marit Stiles called that the central failure, and she is right that first-time buyer incentives and developer charge reductions do not help people who can’t qualify for a mortgage in the first place.
The Liberals questioned whether the return-to-balance projections were credible, given that the same promise has appeared in three consecutive budgets and been missed every time. Fair point.
And Green MPP Mike Schreiner made a point that deserved more attention than it got: the budget’s energy chapter contains nothing on demand management or grid-scale storage. Those technologies could reduce the need for expensive new generation capacity, but they do not come with ribbon-cutting ceremonies.
Which may be the whole problem.
Campaign Promises Meet Spreadsheets
First budget of a new mandate, from a government that just won re-election on capital announcements: nuclear contracts, highway ribbons, hospital expansions. Good for the stump speech. Expensive on the spreadsheet. The ribbons need to be cut. If any of these major projects blow their budgets before the next election, the fiscal competence narrative collapses.
In Ontario, major projects blowing their budgets is less a risk than a tradition.
Sources and verification: The $14.6 billion projected deficit and return-to-balance timeline are from the 2025 Ontario Budget documents (Ministry of Finance). The $3.8 billion Pickering nuclear restart figure should be verified against the most recent Ontario Power Generation and Infrastructure Ontario announcements, as capital commitments for nuclear projects are updated regularly. Toronto’s $4 billion transit capital shortfall is from City of Toronto Capital Budget submissions. The Parliamentary Budget Officer analysis referenced concerns the province’s return-to-balance track record; verify the most current PBO assessment at pbo-dpb.gc.ca.
Track how every MPP voted on the budget supply bills at Ontario Pulse.