How higher Canadian Provincial Governments spending results in higher deficits, taxes, and debt servicing costs

What is true for Canadian provincial governments is also true for other Western government entities!

"... Similarly, we find that a $1.00 increase in per-capita provincial program spending, which causes a rise in the budget deficit, results in a $0.71 decline in future program spending, a $0.26 increase in future [taxes], and a $0.10 increase in debt service payments, all measured in present value terms. This means that an increase in provincial program spending in the current period is not entirely offset by future spending reductions and that there will be an associated increase in the future tax burden. Thus, the impacts of fiscal shocks can reverberate for several years.
In Canada, federal cash transfers to the provinces represent a sizable portion of total provincial government revenues, particularly for provinces that receive equalization grants. This study also highlights the importance of federal grants and transfers in provincial governments’ fiscal adjustments. According to the available empirical estimates, a $1.00 permanent increase in equalization grants and other federal transfers such as the Canada Health Transfer (CHT) and Canada Social Transfer (CST) causes provincial program spending to increase by $0.69 and $0.80, respectively, with no significant change in provincial governments’ own-source revenue. ..."

How Provincial Governments Respond to Fiscal Shocks and Federal Transfers | Fraser Institute