Ontario will pay almost $500 million more to colleges and universities this year, but cut most other spending as the province whittles away at its deficit, Finance Minister Greg Sorbara says.

Greg Sorbara, Minister of Finance

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The government may also renege on a promise to balance the province's books within two years, Sorbara told the Ontario legislature Wednesday.

"It may be possible to get there in 2007/08 if we don't need our reserve," Sorbara said while tabling his second budget as finance minister.

"But we will only get there if we continue to make 'discipline' our watchword, and hold the line on spending in most ministries."

The Liberal government has been fiercely criticized for breaking an election campaign promise by introducing a new tax in its 2004 budget.

Not surprisingly, there were no new taxes or tax increases in the document Sorbara unveiled Wednesday.

The budget's most significant spending increase came in post-secondary education, where the Liberals have committed to hike base funding for colleges and universities, and to increase student loans and grants. (More on Education >>)

Post-secondary institutions stand to receive $397 million more than they did last year, while the amount of financial assistance available to students will rise by $42 million.

Other than the Ministry of Health, which gets an increase of almost six per cent, government departments will see their individual budgets frozen or cut as Sorbara continues to wrestle with a deficit pegged at $2.8 billion this year.

During the election that brought them to power in 2003, the Liberals promised to balance the books in their first budget.

However, faced with a $5.5 billion shortfall inherited from the previous Conservative government, Premier Dalton McGuinty opted to postpone the balancing act in 2004, and to break another election promise by introducing a new health tax.

Wednesday's budget had been expected to include a deficit of up to $6 billion, after the provincial auditor rejected an accounting strategy that would have put off almost $4 billion in costs. (More on Deficit and Debt >>)

But unexpected tax revenues allowed Sorbara to increase spending while holding the deficit to $3 billion.

Conservative Leader John Tory

Conservative leader John Tory said the government had betrayed taxpayers by running a deficit despite last year's unexpected revenue windfall.

"They could have invested in services while reducing the deficit, and provided tax relief," Tory said. "Instead, they just spent more money."

The budget noted unexpected revenue drops last year, notably at the gas pumps and casinos. (Other Highlights >>)

It also promised an ambitious $30 billion program of infrastructure renewal extending well beyond the next general election.

Where the money comes from...

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Where the money goes...

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What's changed and by how much

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