Manitoba deficit forecast as of Sept. 30 was quadruple original budget number, NDP government says

The Manitoba government's deficit is now projected to come in at $1.6 billion more than quadruple the original number in the spring budget and the highest shortfall in the province's history outside of the COVID-19 pandemic.

A fiscal update released Tuesday by the Finance Department points to a softening economy leading to a drop in projected income-tax revenues and a major downturn in Manitoba Hydro's numbers. The Crown utility was expecting a profit this year, but is now forecasting a loss due to a dry summer that reduced power-generating water levels.

On the spending side, expenses are up, driven in part by inflation, new health-care costs and recent collective agreements in the public sector.

The numbers reflect the province's financial projections as of Sept. 30 the end of the second quarter of the fiscal year. That was three days before the provincial election that saw the NDP defeat the Progressive Conservatives, who had been in office for seven years.

Premier Wab Kinew accused the Tories of hiding the state of the province's finances before voters went to the polls. He promised an external review of the province's books.

"The outgoing PC administration didn't budget for programs, that count in the tens of millions of dollars, that they made many announcements of publicly," Kinew said Tuesday. He cited a $50-million cultural grant program, announced in the summer, as an example.

Kinew also accused the Tories of failing to account for wage settlements in the summer with doctors and allied health professionals.

"It's very clear now that budget 2023 and the PC government's overall fiscal plan was nothing more than wishful thinking and in short, that has left our province with a significant fiscal mess."

Tory leader and former premier Heather Stefanson denied Kinew's accusations.

Everything was budgeted for, she said, and there were hundreds of millions of dollars set aside as contingencies for wage hikes under collective agreements, among other items.

She accused the NDP of inflating the deficit figure at the halfway point of the fiscal year.

"I would suggest maybe they're looking at inflating those numbers as much as possible so that, in the spring, they can come out with numbers that make them look like heroes," she said.

The last fiscal update under the Tory government, in July, maintained the original budget prediction of a $363-million deficit. It also warned that the dry summer threatened Manitoba Hydro's projected profit, but said it could be covered by a $200-million contingency fund set aside in the budget.

Two months later, in September, Manitoba Hydro revised its projected profit to an expected loss of $160 million.

Despite the fiscal crunch, the NDP government remains committed to its campaign promises, including income and fuel tax cuts set to kick in Jan. 1, Kinew said. The NDP will also fulfil a promise to balance the budget within a first term, he added.

Kinew pushed aside reporters' questions on how that might be done, and said details are to come shortly.

"I think you'll see in the path that we lay out, in the next few finance announcements that we do, a plan [for] restoring fiscal responsibility at the provincial level."

Manitoba has run deficits every year since 2009, with the exceptions of surpluses in 2019 and last year.

The NDP government faces more fiscal pressure in the coming months, including ongoing collective bargaining for 11,000 civil servants.

Shortly after being elected, the NDP changed the board at Crown-owned Manitoba Public Insurance and pushed management to settle a strike. A new offer with wage increases of more than 13 per cent over four years was accepted by workers.

Manitoba's latest deficit forecast quadruples earlier estimate

10 months ago

Duration 2:18

The NDP government says it's been left with a "significant financial mess" from the previous PC administration. The deficit forecast is the worst non-pandemic shortfall in Manitoba's history.