Hey there, time traveller!
This article was published 16/2/2009 (3054 days ago), so information in it may no longer be current.
Manitoba Finance Minister Greg Selinger said again last week that the province is facing some budget challenges but it's nothing the rainy-day fund can't handle -- a mantra he's repeated since the fall.
But other provinces have been lining up in recent weeks to prepare voters for big budget deficits, some edging into the billions. Newfoundland, British Columbia, Ontario and nearly every other province have warned of red ink and last week the Quebec government changed its tune and said terrible economic numbers in January would force it to post a shortfall in 2009-2010.
Every province except Saskatchewan and Manitoba is warning of big deficits, though some have rainy-day funds they can tap into to balance the bottom line.
But some of the province's top economists aren't very hawkish about the Doer government's chances of avoiding real deficit this year, even with a rainy-day fund holding more than $600 million for general spending and more than $200 million earmarking for health.
"I think all bets are off," said University of Manitoba economics professor Fletcher Baragar. "$600 million is a fair chunk of cash, so they might be able to make it one more year, but I wouldn't be surprised if that fund isn't totally drained in 2009-2010."
Baragar says personal income tax revenues and sales tax revenues might hold fairly steady. Corporate tax revenues and royalties from mining and logging could take a nasty hit, though.
The province has been mum on revenue and spending projections for the 2009-2010 budget year, saying those figures will be revealed in late March or early April when the budget is unveiled. Selinger also wouldn't speculate on the size of the province's deficit.
Last week, Tory leader Hugh McFadyen said Premier Gary Doer should recall the house to deal with the province's slowing economy and come clean on revenue and spending projections.
"In Manitoba today we have leadership vacuum," he said. "They've run out of excuses in delivering the budget. The raw material to put together a budget is in the hands of government."
Economists agree the province is uniquely well-positioned to weather the global storm. Unemployment is still remarkably low. The province's construction industry is steady and Manitoba is projected to be among the three best performing provincial economies this year.
But the steady trickle of bad news for provincial number-crunchers can't be ignored.
Federal transfer payments are basically stagnant even though costs, especially for health care, are rising. The unemployment rate inched up from 4.3 to 4.6 per cent last month, and Manitoba's manufacturing sector shed nearly 5,000 well-paying jobs. Provincial civil services pensions have been battered and the Doer government has promised spending to spur the economy, including small tax cuts and credits and more infrastructure spending. That costs the government more, as does a higher demand for social services.
"If the economy keeps trending downward this year at the same rate, we can maybe stay in the black this year with a bunch of gymnastics, but the economy can't keep trending down without us facing a deficit." said John McCallum, a finance professor at the U of M.
--with files from Bruce Owen