A magician manipulates objects such as coins or cards, but the craftiest sleight of hand is sometimes performed by politicians at budget time. The Selinger government, for example, said both urgency and emergency required it to raise the PST by one point. In addition to flood-related costs, failure to raise the tax would have meant the province would be unable to take advantage of new federal infrastructure funds that are available only on a cost-shared basis.
The great projects of the future, in other words, would elude Manitoba like a coin that vanishes without a trace from a magician's hand. But what about municipalities, which also need cash to participate in provincial and federal cost-shared infrastructure programs? Won't they also need millions of dollars in new revenue? Yes, but they won't find it in the budget, which left cities high and dry, despite the illusion they are major beneficiaries of the PST hike. In fact, just $30 million annually of the PST increase has been earmarked for 200 Manitoba municipalities. Winnipeg will receive $14 million for residential streets, compared to $7 million last year. The extra cash is enough to fix a few kilometres of broken street. Roads and other civic infrastructure will continue to deteriorate because cities lack the fiscal capacity to raise the kind of revenue necessary to reverse, or even slow, the trend. Municipalities have long complained it is unfair to expect them to cost-share projects on an equal basis with Ottawa and the provincial government, which have vastly deeper pockets and a wider array of revenue sources. The province, however, has now occupied the tax room that municipalities wanted to solve municipal problems.
The tax increase is really about enabling the province to meet its obligations on flood protection and its ambitions for new schools, personal-care homes and hospitals. Even community rinks, wading pools and splash pads, once the domain of municipalities, will be announced by the government as provincial projects, which will be convenient at election time.
The idea of a sales tax was first proposed by Winnipeg in the 1960s as a way of financing major infrastructure projects, but its pleas for new revenue sources were repeatedly rebuffed.
In recent years, the city, this newspaper and business groups have proposed that a one-point share of the PST be directed to municipal needs. That remains a better idea than the NDP's selfish grab.
The government says new legislation will require it to report annually the funds it spends on municipal infrastructure. It will show hundreds of millions of dollars are being spent in Winnipeg and rural Manitoba -- as is the case currently -- but it won't show that cities are still losing ground on pressing infrastructure issues.