TORONTO - Ontario's projected deficit for 2012-13 has fallen from $14.8 billion to $11.9 billion.
Finance Minister Dwight Duncan says the nearly $3-billion drop from last spring's budget projection is due to higher than expected revenues and lower expenses.
Corporate taxes were more than $1 billion above the budget forecast, while revenues were also up from the sales tax and the land transfer tax.
The government expects to spend $1.2 billion less than budgeted mainly because of lower interest on debt, and savings from reducing the ability of teachers to bank sick days and cash them out at retirement.
Duncan says the government will not need to use the $1-billion reserve in the budget, so will use half of that to reduce the deficit and the rest will be kept for any unforeseen events this year.
Despite the lower deficit, Duncan says the weakened global economy, especially in the U.S. and Europe, will require "continued strong action" if Ontario wants to balance its books on schedule by 2017-18.
"Ontario continues to beat its deficit targets, a direct result of managing expenses while also protecting health care and education," Duncan said in a speech to the Canadian Club in Toronto.
"Ontarians don't want deep, across-the-board cuts that would hurt their valued public services."
The lower deficit projection was Duncan's last official announcement as finance minister.
The Liberals will pick a new leader this weekend, and Duncan has already offered to resign his Windsor-Tecumseh seat for Sandra Pupatello if the former Windsor-West MPP emerges as Ontario's new premier.
The Opposition wasn't impressed, however, saying Ontario's economy has a "history of mismanagement" under the Liberal government.
"This is Minister Duncan playing clean up, his swan song," said Progressive Conservative critic Vic Fedeli.
"When you look at the experiences of the last nine years, you would see that this is a completely mismanaged economy."
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Dalton McGuinty's Scandals
When you lead Canada's biggest province for nine years you're bound to have some missteps. Ontario's Premier Dalton McGuinty has had his share of scandals and mistakes. <p>We highlight a few that caused him more headaches than usual. <p>Photo: Ontario Liberal Party
Back in 2004, a relatively new Liberal government under Premier Dalton McGuinty was forced to go back on a campaign promise not to raise taxes and instituted a health premium of between $300-$900. Photo: Alamy
In 2006, the Liberals tried to announce a new $46-billion energy plan that would see renovations of many of Ontario’s power plants. But the plan became a problem for the Liberals when <em>the Globe and Mail </em>revealed that the government tried to exempt their plans from environmental assessments. Photo: Shutterstock
The government’s plans to modernize medical records in the province ran into massive scandal when reports of overspending, waste and possible conflict of interest were revealed at <a href="http://en.wikipedia.org/wiki/EHealth_Ontario">eHealth</a>, the agency responsible for building a new electronic records system. The scandal forced the resignation of Health Minister David Caplan. <P>Photo: Shutterstock
G20 Police Laws
Dalton McGuinty and the Liberals were criticized for laws giving police greater powers to ensure security during the <a href="http://www.cbc.ca/news/canada/toronto/story/2010/12/08/mcguinty-g20-ombudsman-report652.html">G20 in 2010</a>. The laws were seen by civil rights groups as draconian. Andre Marin, Ontario’s ombudsman also <a href="http://www.thestar.com/news/gta/torontog20summit/article/902817--ombudsman-charges-g20-secret-law-was-illegal">criticized the government</a> calling the laws and police action a massive violation of civil rights. <p>Photo: AP Files/Carolyn Kaster
Ontario’s air ambulance service, Ornge, <a href="http://www.huffingtonpost.ca/tag/ornge-scandal">caused another headache for McGuinty’s Liberals</a> after reports of financial irregularities, cost overruns, huge salaries for managers being kept secret and reports of kickbacks began to emerge in the media. <P>Photo: CP/Globe and Mail
Canceled Power Plants
Hobbled by scandal and facing a resurgent Conservatives in the 2011 provincial election, the <a href="http://www.globaltoronto.com/timeline/6442734189/story.html">Liberals cancelled two power plants</a> in the GTA despite the fact it would cost taxpayers several hundred million dollars. The move would dog the Liberals and is seen as a factor in the resignation of Premier Dalton McGuinty on Monday night. <P>Photo: Michelle Siu/CP