Manitoba's projected deficit for the current fiscal year has ballooned by half a billion dollars, Finance Minister Adrian Sala's mid-year report said Monday.
The province expects to end the 2024-25 fiscal year with a $1.3-billion deficit, the report said, which is based on second-quarter financial data from the end of September.
The amount is $513 million more red ink than Salah had expected when he presented this year's budget, which was a $796 million deficit.
According to the report, the biggest driver of the growing deficit is rising health-care costs. Sala's report blames a “prolonged failure to fund services or anticipate financial pressures” and suggests health sectors are not keeping tabs on spending.
“Over time, the breakdown of accountability between government and service delivery organizations has created an environment where increased health spending is not only accepted but inevitable.”
Manitoba has run a deficit every year since 2009. The former Progressive Conservative government has twice run small surpluses, mainly due to public sector wage freezes and higher revenues at Crown corporation Manitoba Hydro.
But the Tories loosened the purse strings in their last two years in office before losing the 2023 election. Additional spending, drought-induced revenue shortfalls at Manitoba Hydro and a one-time, half-billion-dollar legal settlement on child welfare payments created a huge deficit for the NDP to inherit.
As a result, the province finished the 2023-24 fiscal year with a nearly $2-billion deficit.
Gas tax rebates, pay raises strain budgets
Although the NDP government promised to balance the budget by 2027, it has fulfilled some election promises after the election, which has put more pressure on the budget.
It temporarily suspended the provincial fuel tax, which brings in about $340 million a year, and reached a collective agreement with public-sector workers with substantial pay increases.
The government's path to balancing the books depends on keeping annual spending growth below 2.5 percent. Some collective agreements with large unions, such as nurses and civil servants, have higher wage increases than that.
Equalization payments from the federal government are up 24 per cent this year, and the province is changing property tax breaks next year that will bring in an additional $148 million — the biggest tax increase in revenue terms in several years.
Speaking to reporters at the Manitoba Legislature on Monday, Sala tried to portray the larger deficit projection as “good news” because the 2023-24 deficit is higher.
“There is always more work to be done and improvements to be made, but what we do know is that this is a great improvement on what we have left and it shows steady progress towards our balanced budget goal in the last mandate year,” Sala said. A commitment to balance the budget by 2027
PC Health critic Lauren Stone (Midland) described that sentiment as doublespeak.
“On the one hand they're saying they're making progress in reducing the deficit but at the same time it's growing by over 500 million. So it's not good news for Manitobans,” Stone said via Zoom from La Salle, Man.
Bureaucracy is targeted
Uzoma Asagwara said Manitoba is trying to save costs by cutting Manitoba's health care bureaucracy.
Asked why the NDP government didn't integrate some or all of the functions of Manitoba Health, Manitoba Shared Health and the province's five regional health authorities — something Premier Wab Kinnew once promised to do before the 2023 election campaign before withdrawing the idea — Asgwara. Such a move would cause more instability, he suggested.
“It was really important for people on the front lines to know that they will have a government coming into power that is not interested in creating more chaos and destabilizing the system more,” Asagawara said.
