Vital updates:

• The Ontario government and the Government of Canada will provide up to $4 billion in urgently needed one-time assistance to Ontario’s 444 municipalities. Municipalities will be provided with up to $1.6 billion as part of the first round of emergency funding under the Safe Restart Agreement. This funding will help municipalities protect the health and well-being of the people of Ontario, while continuing to deliver critical public services, such as public transit and shelters, as the province continues down the path of renewal, growth and economic recovery. $695 million will help municipalities address operating pressures related to the COVID-19 pandemic through the first round of emergency funding, and over $660 million will support transit systems. The province is also providing an additional $212 million through the Social Services Relief Fund to help vulnerable people find shelter.
• The 2020-2021 budget deficit in Ontario is now expected to reach $38.5 billion, up from the $20.5 billion projected in March. This has resulted from an anticipated $30 billion in COVID-19 relief spending by the end of the year, combined with a loss of tax revenue in the amount of $5.7 billion. In anticipation of a second wave in the COVID-19 pandemic in fall or winter, the Government of Ontario has also earmarked an additional $4.3 billion for a health-care spending contingency fund. Further highlights from the 2020-2021 First Quarter Finances report include:
  • Private-sector economists are now, on average, forecasting that Ontario’s real GDP will decline by 6.6 per cent in 2020. Between February and May, Ontario’s employment declined by nearly 1.2 million net jobs and the unemployment rate rose to 13.6 per cent, the highest rate on record. In June and July, Ontario’s employment increased by 528,600 jobs and the unemployment rate decreased to 11.3 per cent.
  • Program expenses are projected to be $13.1 billion higher than the March 2020 Economic and Fiscal Update, primarily due to additional temporary supports for the pandemic recovery period and the safe restart and reopening of the province.
  • Despite the Province’s funding requirement increasing by $17.0 billion relative to the March 2020 Economic and Fiscal Update, interest on debt (IOD) is projected to be $741 million lower. This reduction in IOD reflects lower interest rates.
  • The initial Ontario Action Plan included $3.3 billion in additional resources for health care; $3.7 billion to support people and jobs, with measures to provide relief to seniors, parents, students and workers; and $10 billion made available to improve cash flows for people and businesses through tax and other deferrals. The revised $30 billion relief package includes $7.7 billion in direct spending on healthcare and supports, $11 billion in support for impacted businesses and households, and $11.3 billion in cash flow assistance for people and businesses.
  • Corporations Tax revenue is lower by $5.2 billion (34.5 per cent) due to a larger projected decline in corporate profits; Sales Tax revenue is lower by $4.2 billion (14.3 per cent) due to a projected decline in household consumption spending; Personal Income Tax and Ontario Health Premium combined are lower by $497 million (1.2 per cent) mainly due to lower projected compensation of employees, partially offset by the impact of Canada Emergency Response Benefit (CERB) payments that are deemed taxable by the federal government;  Gasoline and Fuel Taxes combined are lower by $448 million (12.8 per cent) due to lower projected volumes purchased; Employer Health Tax is lower by $387 million (5.7 per cent) due to lower projected compensation of employees; and all other taxes combined are lower by $75 million mainly due to decreased revenues projected from the Land Transfer Tax.

Reading recommendations:

• Five-Minute Coronavirus Stress Resets, Jenny Taitz, The New York Times
• 4 Conversations Leaders in the #MeToo Era Should Be Ready For, Sarah Beaulieu, Harvard Business Review
• No ‘back to normal’ after COVID-19: Health care should shift focus from treatment to prevention, Kaitlyn Kuryk, The Conversation