Ontario’s budget watchdog says Premier Kathleen Wynne’s Liberal government will be able to balance the books next year as it promised.

But in a report to the legislature Wednesday, Financial Accountability Officer Stephen LeClair warned the red ink could soon begin gushing again due to “rising spending pressures” from provincial programs.

“Given the flexibility built into the government’s fiscal projections, the province is in a position to achieve its commitment of balancing the budget in 2017-18,” LeClair wrote in his quarterly economic and fiscal outlook.

While he forecasts a $4-billion deficit for this year and a $580 million shortfall for next year, revenue growth indicates Ontario will indeed soon be back in the black.

In the Feb. 25 budget, Finance Minister Charles Sousa forecast a $4.3-billion deficit this year and a small surplus after that.

With an election set for spring 2018, that would enable Wynne’s Liberal government to tell voters that it is living within its means for the first time since the 2008 worldwide economic meltdown.

Sousa crowed that LeClair’s report proves the government is moving in the right direction.

“Our plan is working and we will continue delivering on our No. 1 priority of growing the economy and creating jobs for the people of Ontario,” the treasurer said.

“It is why we are on track to beat our deficit targets for the seventh year in a row, and we are eliminating the deficit through a fair and balanced approach — without cuts to vital public services that Ontarians rely on,” he said.

However, LeClair said the fiscal situation continues to be precarious in Ontario.

“If the economy grows somewhat more slowly than expected and maintains the average pace of growth of the past five years, revenues would be lower and the budget deficit would be $1.4 billion in 2017-18, and deteriorate to $3.5 billion by 2020-21,” he wrote.

Speaking to reporters at Queen’s Park, LeClair noted much of the government’s financial good fortune stems from the new cap-and-trade scheme to curb climate change, which should bring in around $1.9 billion in annual revenues through higher fuel prices.

While that carbon-pricing money must by law be spent on environmental initiatives, he said it is also helping the bottom line.

“They can take in $1.9 billion in any one year; we don’t know if they’re going to get out $1.9 billion in spending,” said LeClair, complaining that the Liberals continue to withhold data his office needs.

“I believe that the government claims ‘cabinet confidence’ on too wide of a swath of information.”

Progressive Conservative MPP Vic Fedeli (Nipissing) said the climate change program, which was passed into law Wednesday and will be done in conjunction with Quebec and California, is a cash grab.

“In the cap-and-trade bill, there’s a mechanism to allow them to pay for transit and infrastructure that they were already planning to pay for in the budget,” said Fedeli.

New Democrat MPP Catherine Fife (Kitchener-Waterloo) expressed concern that the government “is not being forthright” with LeClair’s office.

“One has to wonder . . . what are they hiding from the people of this province,” said Fife.

The independent financial overseer is also wary of Sousa’s plan to reduce Ontario’s net debt-to-gross domestic product ratio to 27 per cent, compared to 39.6 per cent in 2015-16.

In 2007-08 — before the global recession — it was 26 per cent.

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LeClair noted the government “has not provided details of how or when it plans to achieve this goal.”

Ontario’s net debt was $296.3 billion in 2015-16, meaning it has since eclipsed the $300 billion mark.

The financial accountability officer wrote the debt could be $350.2 billion by 2020-21.

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