Sometimes when I’m looking for inspiration for a blog post I’ll scan the news sites for mentions of accounting, in the hopes that there’ll be some new development I can write about. Unfortunately, in accounting, new developments aren’t frequent and usually are pretty boring. It’s the nature of the beast.
So when I found this story in the Toronto Star about how the provincial government was able to “create” a surplus this fiscal year by adjusting some of their accounting, I knew this juicy little nugget was gold.
The province also attributed the abrupt fiscal turnaround to higher-than-expected tax revenues and expenses that were lower than projected because of the new accounting procedures.
Expenses in health care were $681-million lower than planned because of the accounting changes, even though spending on health increased seven per cent year over year.
The province came in with a modest $298-million surplus, so the loss without the accounting change details above would’ve been $383-million. The government’s original budgeted deficit was $2.8-billion.
So it seems the always unexpected increase in tax revenues of approximately $2.4-billion caused the sharp fiscal improvement. The comparatively smaller accounting change nudged Ontario into the black.
I guess once they got that close to a surplus they needed something to push them over the edge, since overall it was an immaterial change. The political victory was too sweet to pass up.