TORONTO - Ontario's schools, cities and hospitals were put on notice Tuesday that funding projections would have to be scaled back as hard economic times and a looming deficit are likely to see the province tighten its fiscal belt for the next two years.
The province will do what it can to protect existing public services and programs, but municipalities, universities, schools and hospitals won't get the provincial money expected, said Premier Dalton McGuinty.
"We won't be able to live up to those original projections based on what's happened to the global economy," McGuinty said.
"I'm asking Ontarians, but our transfer partners in particular, to work with us through these challenging times."
While he declined to discuss specifics about the province's economic statement, which Finance Minister Dwight Duncan is set to deliver Wednesday, McGuinty said "all of our transfer partners" would not receive the level of funding originally anticipated.
The premier had strongly hinted Monday that the province may be headed for a deficit, while many economists have lowered their outlooks and predicted budgets won't be balanced -- in Ontario or federally.
The gloomy economic forecast nationally has been heightened in Ontario by a manufacturing sector bleeding jobs in the wake of a U.S. economic downturn.
In contrast, Saskatchewan announced Tuesday the biggest single-year tax reduction in its history on the back of an economic boom. Premier Brad Wall even visited Ontario last month, hoping to woo laid-off workers to his province.
B.C.'s finance minister said Tuesday he's expecting spending increases in his next budget based on higher than predicted revenues from natural gas and drilling rights.
Asked how long the difficult fiscal times could last in Ontario, McGuinty replied: "Hard to say, but the estimates we've received are certainly two years."
"We'll wait and see how things evolve but obviously what we would like to do is get out of this difficult period as quickly as we can."
He also dismissed concerns that the move could be taken as a broken election promise for the government, which vowed to improve services in its 2007 campaign.
"People elected me, first and foremost, to act responsibly, even in circumstances which we had not all anticipated," he said.
"We will do what we can to protect public services and ... we will have to demonstrate some restraint."
The government won't abandon plans to improve health care and education, McGuinty said, but it won't be moving as quickly as expected either.
Randy Robinson, a spokesman for the Ontario Public Service Employees Union, said McGuinty's comments overlook the fact a strong public sector is the key to economic recovery.
"It doesn't make any sense to us to have restraint in the one sector of the economy that has the chance to be strong throughout this," he said.
"When you're into an economic downturn, that's not a time for restraint -- that's a time for investment."
Progressive Conservative Leader John Tory said the looming deficit isn't the result of global events but rather the "continuous, undisciplined spending spree" of the Liberals, who "blew Ontario's economic surpluses, instead of using them wisely to prepare for the rainy day that always comes."
The government should be showing restraint, especially when it comes to public sector jobs, instead of thinking about slowing public services to avoid a deficit, Tory said.
"What you have to do is actually go about trying to find some efficiencies in your governments and trying to cut out some of the pork," he said.
"If Mr. McGuinty believes he has the licence to plan for a deficit every year, he'll do that."
NDP Leader Howard Hampton said McGuinty's comments about the so-called "MUSH" sector -- municipalities, universities, schools and hospitals -- means all those groups are in for real budget difficulties.
"The McGuinty government that promises and boasts about funding for municipalities is in fact going to leave municipalities, school boards, hospital boards in a really tough situation," Hampton said.
