The government of Ontario updated its fiscal situation on December 17, 2003, after an initial estimate given by The Fraser Institute in September and generally confirmed by Erik Peters, the former Provincial Auditor, in October.
In the months since the Peters deficit estimate, the government has released many trial policy balloons in an effort to foreshadow possible measures to balance the budget. This Alert examines all of these measures and provides quantitative assessments of their fiscal impacts.
The fiscal framework used here has the same starting point as the government, but has slightly more conservative assumptions about future trends in revenues and expenditures. Specifically, it is assumed that:

• Revenue grows at the same pace as nominal GDP.
• The economy grows at 3 percent and inflation at 1.5 percent.
• Population growth is taken from the Ministry of Finance median projection.
• Program spending is based on a combination of inflation, population growth, and average real per capita annual increases since spending began growing again in 1998.
• Capital spending is assumed to remain unchanged.
• Any additions to debt are refinanced at a money market interest rate of 5 percent.
• The budget reserve remains at $1 billion.

These assumptions are identical to those from the September 2003 Fraser Alert , State of emergency: Ontario's potential $4.5 billion deficit.