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Flood packs $815-M wallop

Bill makes balancing Manitoba's books even tougher

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This year's flood has turned out to be a $343-million budgetary headache for Manitoba's finance minister.

Stan Struthers told the Free Press on Tuesday the tally for flood compensation in the province this year is a whopping $815 million, of which $472 million is expected to be recovered from the federal government.

That leaves Manitoba saddled with $343 million in unanticipated expenses in a year in which it was already projecting a $438-million deficit.

The huge bill will make it more difficult for the NDP government to keep a nearly two-year-old promise to put the province's books in the black by 2014.

But Struthers said Tuesday the government is still sticking by its original goal. "We still remain committed to that," he said.

The Finance Department is expected to release its second-quarter financial report this week, covering the period from July through September. It will also offer the first revised deficit forecast since Struthers' predecessor, Rosann Wowchuk, tabled her budget in April. (Wowchuk did not run for re-election in October.)

Struthers said the flood costs will dominate the second-quarter report. But he refused to reveal his department's latest estimate of the 2011-2012 deficit.

Conservative Leader Hugh McFadyen said the Tories have always believed the Selinger government understated the costs of the flood.

"...In effect delaying the release of the bad news until after the election," he said.

The Opposition leader said the Conservatives' suspicions rose after flood experts publicly worried the province had miscalculated the mighty effect of the swollen Assiniboine River back in the summer.

"Those missed forecasts... would contribute to the higher costs we're now seeing," McFadyen said. "The taxpayers are going be paying for the mismanagement of the flood."

Lake Manitoba homeowner and cottage developer Peter Schroedter said as high as the costs are now, they could go higher -- up to $1 billion in lost homes and farmland.

"A lot of people won't know what the damages will be until next year. The water levels on Lake Manitoba haven't gone down... they're still at 814.75 feet and if the ice breaks at that level, my house is going to go and a lot of other people's, too," Schroedter said.

The huge flood bill and its still undetermined impact on the province's bottom line is sure to have a significant influence on next spring's budget.

Struthers will soon set up meetings across the province to get Manitobans' input before finalizing his economic blueprint. It's expected he will try to lower their expectations.

The minister said Tuesday the government "made the right call" in spending hundreds of millions of dollars in compensation to affected homeowners, cottagers, farmers and other business owners.

"We knew we had to support Manitoba families who were really being impacted by this unprecedented flood."

He said the $815-million bill does not include the cost of rebuilding flood-damaged roads and bridges, nor construction of the $100-million channel to aid in the draining of Lake St. Martin and Lake Manitoba.

Although Ottawa covers as much as 90 per cent in disaster financial assistance costs, some of the agricultural support programs necessitated by the flood were more equally cost-shared by the two levels of government. And the cost of one livestock feed plan was borne by the province alone, Struthers said.

With the province intent on staying the course in its five-year plan to put its books in the black, government departments are expected to be under increasing pressure to find additional cost-savings. Struthers did not elaborate Tuesday on what measures those government departments might take.

During the recent provincial election, McFadyen said that given the state of the province's finances it was unlikely a government he led would be able to balance the books before 2018.

It's worth noting there are often wide spreads between budget forecasts and end-of-year results. For example, last fiscal year, Manitoba recorded a deficit of $298 million -- $247 million less than originally budgeted. As late as April, Wowchuk projected a summary deficit of $467 million for 2010-2011. But by early September of this year, when the public accounts for the last fiscal year were released, the deficit was drastically reduced.


-- with files from Alexandra Paul

Republished from the Winnipeg Free Press print edition December 14, 2011 A3

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