The really big number in the latest budget — a $310 billion debt — keeps getting bigger. And badder.

With the Liberals’ stillborn spring budget reincarnated as a summer spending plan, storm clouds loom over Ontario’s debt horizon.

Two years ago, Moody’s downgraded our credit rating. Two weeks ago, the rating agency placed Ontario on a “negative outlook” for another possible downgrade — a precursor to potentially higher interest rates.

Just how bad is it?

The opposition Tories have been warning for years that Ontario is heading the way of Greece, which faced the spectre of bankruptcy two years ago. But as the Progressive Conservatives discovered on the campaign trail, voters rarely cast their ballots on the basis of balance sheets.

That doesn’t mean we shouldn’t care about Ontario’s red ink, lest it spread out of control. But to restore budgetary balance, it helps to have a balanced perspective on our borrowings.

The latest budget is built on a $12.5-billion deficit. Under the most optimistic projections, we won’t be in balance for another three years, which means piling on yet more debt to an already unprecedented legacy of borrowings. Annual interest charges just to service our $310 billion total debt will reach $11 billion this year — more than we spend on postsecondary education or even social services.

As daunting as our debt load might seem, being placed on credit watch by the rating agencies is nothing new for Ontario. Investors still consider it an extremely safe bet, and the province continues to pay relatively low interest rates for long-term borrowings.

What do bond buyers know that we don’t?

The total debt figure isn’t quite as bad as it looks. Ontario’s net debt — after accounting for the government’s cash and short term investments (a hefty $20 billion to hedge against market volatility) comes down to $289 billion.

That’s still big — not just the number, but compared to the size of our provincial economy (Gross Domestic Product). Our net debt will exceed 40 per cent of GDP for the first time this year, peaking at 40.8 per cent in 2015-16. (The previous high — 32 per cent of GDP — came during the last Tory government as it struggled to reduce inherited NDP deficits, post-recession.)

By any measure, that’s a high ratio of debt to economic activity, notably when the federal debt is included. Six full years after the 2008 economic downturn — which merited strong fiscal stimulus from all governments — continuing budget deficits are getting harder to justify.

Yet even today’s high borrowing isn’t as bad as it looks on the books.

Another way to look at the red ink is to simply add up all the deficits incurred by Ontario’s governments since Confederation, which produces an “Accumulated Deficit” of $190 billion this year — roughly $100 billion less than the net debt noted in the budget. It’s still a staggering number, but why is it one-third less than the more commonly quoted net debt of $289 billion?

Quite simply, the difference between those two numbers — $99.5 billion — represents the “non-financial assets” owned by the government and people of Ontario. That includes “tangible assets” such as hospitals, schools, roads, bridges, transit lines and other infrastructure investments made by the government.

In short, it is Ontario’s long term capital stock.

Until 2002, that’s how Ontario historically measured its total debt — as the sum of its annual deficits accumulated over time. By that measure, today’s accumulated deficit is 26.5 per cent of GDP — significantly less than under the Mike Harris Tories, when it peaked at 32.2 per cent.

The big risk is that if today’s low interest rates rise rapidly, our carrying costs could also go up. And if credit rating agencies start to make loud noises, Ontario could be forced to pay an interest rate premium to sell its bonds on foreign markets.

But both of those scenarios seem alarmist.

First, the tall foreheads who look after Ontario’s borrowings have been quietly locking in the province’s bonds for longer terms. Since 2008, the average borrowing term has increased from 8.6 years to 13.6 years until bonds mature. The average interest rate Ontario pays has dropped steadily to 3.9 per cent.

Second, it’s unclear that those overrated credit rating agencies still hold the sway they once did. Past downgrades tended to have little impact on the rates because investors had already discounted for them.

There’s another reason the rating agencies aren’t in a hurry to punish Ontario: Moody’s can see what the rest of us can’t — that there is unused fiscal capacity to raise taxes, notably on corporate rates, even if it’s politically unpalatable.

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Premier Kathleen Wynne has been unequivocal about achieving a balanced budget by 2017-18 (as the Liberals did pre-recession). Given the improved economic outlook for next year, and the fact that they will enjoy a clear majority in the legislature until 2018, they won’t have any excuse to miss their target.

Until then, the bad news about the debt will keep getting bigger. And badder.