No matter what happens in Thursday's Ontario election, the province's credit rating will probably be downgraded in the immediate future, the first time since April 2012 when Ontario lost its coveted Aa1 status.
Moody's Investors Services, an international credit rating agency, has been signalling a downgrade for some time. Not only is Ontario's debt too large, but the government is continuing to produce annual deficits that are unsustainable. The bond markets have long recognized this unpleasant fact. Last month, 10-year bonds issued by the province were commanding a price of 99.1. That compares to the 99.6 price those same bonds were fetching two years ago, just after Ontario's credit rating was lowered.
Most of this is lost on the general population, which finds itself caught up in celebrity politics, the finger-pointing that sucks much of the oxygen out of most election campaigns, and negative ads that are mostly ridiculous in their hyperbole.
Indeed, more time has been spent in this election campaign on sound bites and gotcha moments than on Ontario's ability to properly function in the future.
All of this nonsense helps a party get elected, but it doesn't automatically make for better government.
Yet when a new government is sworn in later this month, whether it be Liberal, New Democrat or Progressive Conservative, whether it holds majority or minority status, it will face the difficult but not insurmountable challenge of balancing this province's budget and slowly getting Ontario's financial house in order.
And no matter who holds the power in Queen's Park, they will have little choice but to embrace some fiscal discipline. The financial community and those to whom governments like Ontario turn to borrow money are demanding that this province become more financially responsible.
There's no option. At stake is Ontario's future and the ability of its government to properly function, to fund the programs that need to be funded, to ensure that its governmental and constitutional responsibilities are correctly met.
Right now Ontario's spending is out of control. The budget that was introduced on May 1 forecast a $12.5-billion deficit. The province already spends 9.2% of its revenues on interest payments. Within the next four years that figure is expected to rise to 11%.
Yet spending on Ontario's borrowing charges could even be greater if the province's credit rating is downgraded – and/or if interest rates rise. Right now interest rates are at near-historic lows. But even if rates were to climb by one percentage point, which is not unlikely, the cost to Ontario and its taxpayers could be as much as $3 billion in additional borrowing costs.
And so while the Ontario election will be held on Thursday, the reality of governing will resume on Friday, either with the same group or another.
But it can't be business as usual.