Manitoba's deficit forecast approaching $2B
Highest estimated shortfall in Manitoba's history outside the COVID-19 pandemic
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 beginning of the COVID-19 pandemic.
The third-quarter report, released by 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 announced audits 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 minister took numerous shots at the previous government, accusing the Tories of failing to account for decreasing revenues and spending beyond their means, but he wouldn't answer how the NDP 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, while saving Manitobans money 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 a provincial budget, to be released on April 2, that Manitobans will be "very happy" with.
Unbudgeted health-care spending: NDP
The new $2-billion deficit forecast reflects the province's financial outlook at the end of the third quarter, which was Dec. 31, 2023.
The report states the deficit estimate is compounded by a "substantial increase" in health-care expenses the previous government didn't budget for, such as labour settlements that led to wage increases for some workers and new costs for recruiting and retaining staff.
It also says a financial downturn at Manitoba Hydro worsened the 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 below budget due to losses at Hydro, decreases in individual and corporate income 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," Khan said.
"What is clear 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 2 as something that's absolutely amazing and can't wait for.… You can't have it both ways."
The recent deficit forecast is $385 million 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," Gage Haubrich, 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 said a result of health-care overspending, he's ordered a forensic audit of the Northern Regional Health Authority and comprehensive 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 said the audit of financial spending at the Northern health authority is at a "somewhat deeper level," though he wouldn't explain Friday why that authority is facing a more detailed examination, or what'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 action to 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 acknowledge the province's financial challenges.
It commissioned a third-party review, released in February, that found the PCs provided an incomplete 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 NDP has 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 a call Friday from groups that urged the government to end the tax break as scheduled by the end of June and restore the levy to 14 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's deficit to a record $2.1 billion in 2020-21.
ABOUT THE AUTHOR
With files from The Canadian Press