Despite the upbeat spin from Queen’s Park, last week’s provincial budget doesn’t give much cause for celebration when it comes to the health of provincial finances. The Wynne government still needs to come to terms with the seriousness of Ontario’s debt problem and develop a plan to address it.

Finance Minister Charles Sousa announced that this year’s operating deficit will be “only” $5.7 billion in 2015/16, down from the $8.5 billion projected in last April’s budget.

But did the government achieve this reduction solely because of strong economic performance and prudent spending as suggested in its budget document? The answer is no. Budgetary smoke and mirrors account for a significant portion of the decline.

For example, the government’s reduced deficit number is largely the result of a big reported increase in government revenue. But why has revenue gone up so much this year? Partly because of one-time injections of revenue including from the disposition of assets like Hydro One shares, which reduced this year’s deficit by about $1.1 billion.

The government should be adjusting for one-time revenue increases from the sale of such assets and earmarking the funds for debt reduction rather than including them as operating revenue. Of course, this would make the deficit larger than it appears in the budget, meaning the government couldn't boast about cutting the deficit nearly in half from last year’s level.

Even if you take the government’s deficit projections at face value, it’s important to put the downward revision for this year’s deficit target into context.

Consider that between 2003/04 and 2015/16, Ontario has increased its net debt by approximately $160 billion to its current level of nearly $300 billion.

In this light, the downward revision in this year’s operating budget deficit by approximately $3 billion doesn’t seem like cause for celebration or self-congratulation.

And, unfortunately, the budget confirms that Ontario’s net debt will continue to grow in the years ahead. In fact, the government projects that between 2014/15 and 2018/19, Ontario’s net debt will increase by more than $40 billion.

The provincial government waves away concerns about continued debt accumulation by pointing out that the province’s debt-to-GDP ratio is expected to decrease (very slightly) in the years ahead.

This argument reflects a fundamental misunderstanding of the severity of Ontario’s fiscal problems. Consider that in 2003/04, Ontario’s debt-to-GDP ratio stood at 27.2 percent. The ratio now stands at a historic high of 39.6 percent -- substantially higher than during the 1990s when provincial finances deteriorated rapidly during the tenure of former Premier Bob Rae.

In this context, the government's projection that the debt-to-GDP ratio will fall ever so slightly from 39.6 to 38.5 percent by 2018/19 doesn’t seem so encouraging. The province should be developing a strategy to aggressively reduce the debt ratio from its current historical high, not boasting about the fact that the ratio is expected to essentially flatline for the next few years.

Ontario’s finances remain a disconcerting mess. The government now spends approximately $1 billion per month just to pay interest on existing debt. The hard work of developing and implementing a detailed and specific plan to restrain spending growth and substantially reduce the province’s daunting debt burden still remains to be done.