At the height of the pandemic, seven of ten Canadian provinces projected record deficits. As the dust settles, it has become evident that FY 2020-21 turned out to be less grim than previously expected. Final numbers for the provinces that have reported them show smaller-than-projected deficits. Ontario\u2019s final deficit was $16.4 billion, less than half of the $38.5 billion that was expected as recently as March. B.C.\u2019s final deficit for FY 2020-21 was $5.5 billion compared to the $8.1 billion projected in April. Alberta, Newfoundland, Saskatchewan, and PEI all reported significantly lower deficits for the prior year than was expected in recent budgets. <\/p>\n
A similar trend is taking shape this year. Initial deficit projections for FY 2021-22 have been adjusted lower in all six provinces that have released updates so far. Among the most significant revisions: B.C. (where the projected deficit was cut by half), Alberta (where it was slashed by more than half), and New Brunswick (now reporting a small surplus). The revisions pushed projected revenues much higher than anticipated at budget time last spring, with increases ranging from 2% in Manitoba to 26% in Alberta. <\/p>\n
Driving the brighter picture: increases in both own-source revenues (including personal and corporate income tax) and federal transfers. In Alberta, corporate income tax revenues are forecast to come in 30% higher than initially thought after business profits held up much better than expected. Non-renewable resource revenue is also expected to triple since Budget 2021 thanks to stronger energy prices. And in B.C., business income tax revenue is penciled in at 36% higher than in Budget 2021\u2014in part due to higher commodity prices.<\/p>\n