Manitoba government continues to run increased deficits heading into election

Manitoba's NDP government will carry a bigger-than-expected deficit into the spring election campaign.

A budget update released Wednesday predicts the government will end the 2015-16 fiscal year with a deficit of $485 million in its core operations $64 million higher than expected in last spring's budget.

The overall budget deficit, which includes Crown corporations and other public agencies, has increased to $550 million from $422 million. The yearly deficit figure has changed little since 2012, despite tax and fee increases.

• Manitoba Premier Greg Selinger eyes higher taxes for the rich

"It's stubborn and it's not going in the right direction, absolutely," said Finance Minister Greg Dewar.

The update shows Manitoba overspent on health care and family services in the first six months of the current fiscal year. Dewar said the government would rather run up a bigger deficit than deny people front-line care.

"Someone gets sick, they need to be treated. Someone breaks a leg, it needs to be mended."

Other factors include new collective agreements signed with doctors, nurses and other health professionals, and a busier-than-expected forest fire season, Dewar added.

The figures are bound to provide fodder for the Opposition Progressive Conservatives, who have signalled that they will focus on voter trust and fiscal management in the upcoming election campaign.

The government promised in the last election to balance the budget by 2015 without raising major taxes. It has pushed back that target date twice, raised the provincial sales tax and fuel tax, and is now musing about a high-income surtax.

Premier Greg Selinger said there have been challenges, including a cap on federal equalization payments and a weak national economy that has led Ontario to join the list of provinces that receive and share equalization. As a result, Manitoba now gets about $300 million less each year in equalization than it did in 2009.

"The hard cap has been problematic for all the provinces," Selinger said.

"This is one of the things we have to work through with the federal government, to make sure that whatever system we have is completely fair and allows provinces to provide roughly comparable levels of service at comparable levels of (taxation)."