Deficit budget hikes user fees, delays tax cuts

JOE.BRYKSA@FREEPRESS.MB.CA Enlarge Image

Finance Minister Rosann Wowchuk comments to media at the Manitoba Legislature Tuesday afternoon.

WINNIPEG - The Selinger government is boosting a host of user fees and delaying planned corporate and personal income tax cuts while hiking health and education spending over the next year.

It will also use its majority in the legislature to change the province’s balanced budget legislation to give it more flexibility to cope with the economic downturn. The amendments will allow the government to run deficits for four years before it is required to post a surplus in 2014.

In her first budget since being named finance minister last fall, Rosann Wowchuk today projected a $545 million deficit for the coming fiscal year.

Spending will be reduced in half of all government departments, while 90 per cent of all new spending will go to health care, education and training, family services and justice.

"To free up these resources for front-line services, we are taking responsible steps to better manage costs," Wowchuk said.

Cabinet ministers will take a 20 per cent pay cut while MLAs and political staffers and senior bureaucrats will be asked to accept a two-year wage freeze. At the same time, the province plans to negotiate a "pause" in wage increases for rank-and-file civil servants.

Manitobans will not face increases in income tax and sales tax rates as the province attempts to put its books in order. But some planned tax cuts will be delayed.

The province plans to partially offset flagging income and corporate tax revenues by hiking a number of service fees. For example, the fee for filing a statement of claim will rise by $25 to $225. The fee to file a petition for a divorce will go up $15 to $150. Camping fees will also rise, although the province will carry through with a second year of free passes to provincial parks.

Wowchuk told reporters that without changing the balanced budget law – which now requires the province to balance the books on a four-year rolling average – the government would be forced to lay off workers, cut services and increase income taxes.

"During the last recession, governments made deep cuts to key services such as health care, education, training and supports for families. While these cuts may save dollars in the short term, the cost of repairing this neglect is much greater in the long term," Wowchuk said.

"Steady, stable investments today will make sure we protect the services Manitobans rely on most."

Larry.kusch@freepress.mb.ca

Budget highlights

The government will:

• Amend the balanced budget law, allowing it to run deficits for four years before returning to a surplus in 2014;
• Reduce spending in half of all government departments;
• Increase spending on health and education by 4.8 per cent and 5.6 per cent respectively compared with the latest forecasts for the current year;
• Increase overall government spending by 1.6 per cent;
• Run a deficit of $545 million in the fiscal year beginning April 1 compared with a projected $555 million for the year just wrapping up;
• Reduce the pay of cabinet ministers by 20 per cent and propose a wage freeze for MLAs and senior government staff;
• Increase fees on a host of services, from camping permits and sewage lagoon tipping charges to the filing of statements of claim and petitions for divorce;
• Spend $1.8 billion on infrastructure, creating 29,000 direct and indirect jobs;
• Boost public school funding by nearly three per cent and post-secondary institutions by 4.5 per cent;
• Allow tuition fee increases of five per cent for universities and $150 a year at colleges;
• Provide $3 million over four years to develop and support potential Olympic athletes;
• Delay planned cuts to corporate and personal income taxes;
• Add 1,500 new social housing units over the next five years;
• Offset fertility treatment costs through a tax credit;
• Expand the fitness tax credit;
• Extend the film and video production tax credit to 2014;
• Boost funding for Winnipeg’s police force by $2.2 million to $11.7 million;
• Create a pension plan for day care workers.