Fiscal update leaves pundit puzzled over how Manitoba will balance budget before next election

Manitoba Finance Minister Adrien Sala says the NDP government remains committed to balancing the budget before the next election, but a veteran political analyst says the path to balance is muddy, especially after cost overruns this year.

"I'm still not clear on the budgetary path that they claim that they've set for themselves and how they're going to get there," Paul Thomas, professor emeritus of political studies at the University of Manitoba, said Tuesday.

The government's fiscal update, released Monday, showed spending is forecast to end up $475 million over budget, driven primarily by health costs. That has increased the projected deficit for the current fiscal year to $1.3 billion, up from the $796 million originally predicted in the spring budget.

The overspending has gone against the government's plan, also outlined in the spring budget, to gradually eliminate annual deficits by the 2027-28 fiscal year.

The plan called for total spending this year of $24.1 billion, rising by about 2.5 per cent annually to $25.8 billion. The fiscal update shows spending this year is now expected to end up at $24.6 billion, which would require smaller annual spending increases to end up at the government's 2027-28 target.

Sala has outlined several cost-containment measures, including reducing health-care administration costs, cancelling some initiatives of the former Progressive Conservative government, and improving procurements — government purchasing — to save $32 million.

"We're talking about $24 billion in total spending. So $32 million is not a drop in the bucket, but it doesn't get you that far in terms of keeping revenues and expenditures closer to balance in any big way," Thomas said.

Sala said a growing economy will help revenues, and while spending levels may be adjusted, the government will end the red ink as promised.

"We've made a clear commitment to delivering on a balanced budget in our final year," Sala said.

"We've done multi-year planning to help ensure we deliver on that and we're prepared for what comes."

Manitoba has run deficits in every year but two since 2009, and previous attempts to balance the budget have included broad measures affecting public-sector workers. In 2010, the NDP government of the day negotiated wage freezes with some unions. In 2017, the then Progressive Conservative government froze wages in some areas of the public sector.

There has been no sign of similarly broad measures this time, Thomas said.

The NDP government elected last year and led by Wab Kinew has promised better treatment of the public sector and has seen wage increases negotiated in recent collective agreements. It has also promised to hire more health-care professionals and fund more police officers.The government may soon get some help on the revenue side in its attempt to balance the books.

The NDP suspended the provincial fuel tax, which raises more than $300 million annually, last January and is set to reinstate it as early as next month. The government has also made changes to education property taxes in a way that will bring in an estimated $148 million more in 2025.