Manitoba's deficit forecast approaching $2B

Manitoba's deficit forecast is now just shy of a staggering $2 billion far and away the highest shortfall in Manitoba's history, outside the beginningof the COVID-19 pandemic.

The third-quarter report, releasedby Finance Minister Adrien Sala, largely attributes the worsening deficit estimate to overspending on health care by the former Progressive Conservative government, and the settlement of outstanding lawsuits.

The NDP minister announcedaudits into most of the province's regional health authorities to get a handle on spending.

"We know that the previous government hid the true picture of Manitoba's books, and our administration is dealing with those inherited challenges," Sala told a news conference Friday.

The finance ministertook numerous shots atthe previousgovernment, accusing the Tories offailing to account fordecreasing revenues and spending beyond theirmeans, but he wouldn't answer how theNDP government would make good on its election promise to balance the budget in four years a job that's presumably gotten more difficult.

The NDP has previously committed to increase spending on social services, whilesavingManitobansmoney at the same time.

"Finding that path [to balance] is hard work, but I think our government is well positioned to do that," Sala said, adding further details will be embedded in aprovincial budget, to be released on April2, that Manitobans will be "very happy" with.

Unbudgeted health-care spending: NDP

The new $2-billion deficit forecast reflects the province's financial outlookat the end of the third quarter, which was Dec. 31, 2023.

The report states thedeficit estimate is compounded by a "substantial increase" in health-care expenses the previous government didn't budget for, such aslabour settlements that led towage increases for some workers and new costs for recruiting and retaining staff.

It also says a financial downturn atManitoba Hydro worsenedthe province's shortfall. The Crown corporation was expecting to turn a profit this fiscal year, but widespread drought conditions reduced Hydro's export revenues.

Provincial revenues are $900 million belowbudget due to lossesat Hydro, decreases in individual and corporateincome taxes, and the NDP government's fuel tax holiday, the report also states.

"We need to do things differently," Sala said at Friday's briefing. "We need to budget differently than the previous government."

PC finance critic Obby Khan disputes the government's claims the Tories mishandled the province's finances.

"The numbers have definitely gotten worse since the NDP have taken over," Khansaid.

"What isclear is that this minister and premier want to run around and say the world is on fire, and yet hail this budget being tabled on April 2as something that's absolutely amazing and can't wait for. You can't have it both ways."

The recent deficit forecast is $385million higher than the government's estimate as of Sept. 30, while expected revenues are $200 million lower than the last projection.

Province urged to find savings

The Canadian Taxpayers Federation urged the province to respond to the growing deficit quickly.

"It's good to see the finance minister looking into this mess, but savings have to be found sooner rather than later,"GageHaubrich, the federation's Prairie director, said in a news release.

Premier Wab Kinew and Sala "need to look for ways to get out of the deficit hole, not dig even deeper," he said.

Sala saida result of health-care overspending, he'sordered aforensic audit of theNorthern Regional Health Authority andcomprehensive financial audits at the Winnipeg, Interlake-Eastern and Prairie Mountain regional health authorities, as well as Shared Health. Southern Health is the only health authority not facing a review.

Sala saidthe audit of financial spending at the Northern health authority is at a "somewhat deeper level," though he wouldn't explainFriday why thatauthority is facing amore detailedexamination, orwhat's prompting the reviews.

"I think these audits demonstrate that we are concerned about the direction of health spending, and that we want to see actionto remedy that, and that it's not acceptable to see these increasing costs go up without better outcomes for Manitobans," he said.

Sala wouldn't name the lawsuits that led to the government paying out allegedly unbudgeted settlements.

The NDP has repeatedly accused the former Tory government of failing to fully acknowledgethe province's financial challenges.

It commissioned a third-party review, released in February, that found the PCs provided anincomplete picture of Manitoba's financial challenges, had aggressive energy-revenue assumptions and made significant spending commitments in the months leading up to the provincial election.

While in government, the NDPhas voluntarily depleted its own revenues by temporarily forgoing the provincial gas tax, which resulted in a $82 million loss for the first three months of 2024.

The government faced acall Friday from groups that urged the government to end the tax break as scheduled by the end of June and restore the levy to14 cents a litre.

The tax holiday has a debilitating impact on efforts to fight the climate crisis and hurts the provincial treasury,said a joint news release from the Canadian Centre for Policy Alternatives, Manitoba Energy Justice Coalition and Wilderness Committee.

Other than surpluses in 2019 and 2023, Manitoba has run deficits every year since 2009.

The pandemic drove Manitoba'sdeficit to a record $2.1 billion in 2020-21.

Manitoba's deficit estimated to hit $2 billion, a record for a non-pandemic year

6 months ago

Duration 2:00

Manitoba's financial picture is looking worse than expected. The province is projecting a nearly $2 billion deficit in the 2023-24 fiscal year, the highest in a year outside the COVID-19 pandemic, finance minister Adrien Sala announced.