The Manitoba government announced a deficit of nearly $2 billion in the last fiscal year Friday, the largest shortfall ever in a non-pandemic year.
“There’s going to be a lot of hard work to be done because of the fiscal mess that the last government left us,” Finance Minister Adrien Sala said in an interview Friday after the release of the province’s public accounts for the 2023-24 fiscal year, which ended in March.
The $1.97-billion deficit is the result of a dip in Manitoba Hydro revenue, increased health-care spending, new collective agreements with educators and civil servants, and the suspension of the provincial fuel tax.
Manitoba’s total revenue was $21.8 billion, expenses were $23.8 billion. The net debt is $32.3 billion. Sala said the government remains committed to balancing the books by 2027.
RUTH BONNEVILLE / FREE PRESS
Finance Minister Adrien Sala Finance holds press conference at the Legislative Building on third quarter fiscal update Friday.
The Progressive Conservatives say Manitoba is on a path to “financial disaster” with the NDP in charge.
The Tories blamed the NDP for the red ink although the public accounts include the final six months of the PC government, when they were accused of going on a spending spree leading up to the Oct. 3 provincial election.
“After promising to balance the budget and not raise taxes, Wab Kinew and the NDP went on a post-election spending spree that has primed the pump for tax hikes and large deficits for years to come,” interim PC leader Wayne Ewasko said in statement Friday.
The province took in $585 million less than it budgeted last year, thanks to a decline in net income for Manitoba Hydro — which reported a net loss of $172 million — and lower tax revenue. Individual income tax revenue was $177 million below budget and fuel-tax revenue was $104 million below budget, thanks largely to the Jan. 1 gas tax holiday, which was recently extended to the end of the year.
A policy expert and researcher said that with falling revenues and a cut in taxes, the province has dug itself a fiscal hole that it’s not getting out of unless it changes course.
“The public accounts update shows that concerns raised by academics, labour and community groups over the last year have been well-founded,” said Jesse Hajer, associate professor of economics at the University of Manitoba. “The income tax cuts implemented by the PCs in the 2023 budget, and maintained by the NDP in Budget 2024, are fiscally unsustainable and have created a structural deficit.”
“The income tax cuts implemented by the PCs in the 2023 budget, and maintained by the NDP in Budget 2024, are fiscally unsustainable and have created a structural deficit.”–Jesse Hajer, associate professor of economics, University of Manitoba
Hajer criticized the gas tax holiday, saying that revenue could have been used to “repair health care and other public services that are still struggling from years of austerity under the previous government.”
Also contributing to the deficit was a one-time half-billion-dollar cost associated with a child-welfare settlement. A policy by a previous NDP government clawed back federal payments to families of kids in care. The suit was settled by the current NDP government this year, but the cost was attributed to last year’s budget, which was introduced by the Tories before they were defeated.
“If the NDP government still plans on balancing the budget in their first term, they will either need to reverse these costly tax cuts or raise other taxes or fees, or undertake deep cuts to public services,” said Hajer.
Sala said the NDP is getting the province’s finances back on track and helping to grow the economy.
“I think our investments in health care are one of the most important places that we’ve started,” he said, pointing to the recruitment of 873 net new health-care workers announced Thursday. “We know a strong economy is built off of a strong health-care system.”
The finance minister said the NDP energy policy announced last week, which includes 600 megawatts of new wind energy in nation-to-nation partnerships with Indigenous communities, will expand capacity and enable investment and economic growth.
While Manitoba relied on federal transfers for nearly a third of its revenue last year, Sala said the NDP plans to transform it into a “have province” with clean energy. In the meantime, “this is about responsible budgeting and balancing the need to be responsible with the need to invest in the things Manitobans want — which is better health-care services and greater affordability.”
He defended lifting the 14 cents-per-litre fuel tax, which cost the province $104 million in the first three months of the year.
“That’s a key piece of making life better for Manitobans.”
Sala said the move drove down inflation in Manitoba ahead of the rest of Canada.
“We’re seeing exciting economic indicators suggesting we’re going to see more jobs and more economic growth in Manitoba,” he said.
The province is expecting better times ahead. A lower deficit of $796 million is projected for the 2024-25 fiscal year. The total revenue is projected to be $23.3 billion while total expenses are forecast at $24.1 billion.
“When our government says we’re going to do something, Manitobans can count on us to get it done,” Sala said.
carol.sanders@freepress.mb.ca
Carol Sanders
Legislature reporter
Carol Sanders is a reporter at the Free Press legislature bureau. The former general assignment reporter and copy editor joined the paper in 1997. Read more about Carol.
Every piece of reporting Carol produces is reviewed by an editing team before it is posted online or published in print — part of the Free Press‘s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.
Our newsroom depends on a growing audience of readers to power our journalism. If you are not a paid reader, please consider becoming a subscriber.
Our newsroom depends on its audience of readers to power our journalism. Thank you for your support.