Manitoba budget served with side of horseshoes, four-leaf clovers and a rabbit’s foot

In the world of government budgeting, as in life, it’s sometimes better to be lucky than good. And over the next fiscal year, Manitoba’s NDP government is going to need a whole lot of luck if its budget projections are to hold true.

On the face of it, the budget tabled Tuesday is full of relatively good news. It features increased spending in priority departments like health, some modest tax relief and a significantly lower deficit.

How will Premier Wab Kinew and Finance Minister Adrien Sala pull off a fiscal trick like that? It’s all based on an assumption that while good news is still in short supply, there will be a whole lot less bad news than last year.

For 2026-27, expenditures will go up at least five per cent over the previous budget, while revenues are expecting a massive seven per cent bump year-over-year. The rise in expenditures is driven largely by health care, which will see an increase just shy of $1 billion over the upcoming year.

Will these numbers hold up over the fiscal year to come?

Last year, the NDP government missed massively on its forecasts. However, mitigating that woeful fiscal performance is the fact that every province in Canada will end the 2025-26 fiscal year with enormous deficits that are larger than those forecasted at the beginning of the budget period.

These bigger than expected deficits were driven by lower than anticipated economic growth, persistent inflation and devastating tariffs on Canadian exports to the United States — our biggest trading partner by far — imposed by President Donald Trump.

Although it’s unclear whether the new budget will be more accurate, there are some positive signs.

On the revenue side of the budget equation, Manitoba should benefit from having far fewer — if any — unforeseen reductions, as was the case in 2025-26.

Last year, Manitoba’s forecast revenue declined by more than $600 million, the result of a series of unusual and hard to predict factors.

Transfer payments from Ottawa went down by $289 million from a variety of factors, including $137 million less for a cost-shared child care program resulting from a renegotiation of terms, and $100 million less in infrastructure projects that failed to break ground.

Manitoba also suffered a $161 million reduction in personal income tax revenues stemming from a federal tax reassessment. Add to all that a massive loss at drought-stricken Manitoba Hydro — which must be booked into the government’s summary budget statement — and you’ve got nothing but carnage on the revenue side.

This upcoming fiscal year should be better.

The drop in transfer payments should be a one-time event; this year, total transfers to Manitoba are expected to be more than $9 billion, driven by a record equalization payment. As long as Manitoba is better prepared to engage on child care and infrastructure, forecasted federal transfers should come in on target.

The same positive outlook applies to income taxes. The aforementioned reassessment that hammered personal income in all provinces should not be a factor moving forward.

There is also some very cautious optimism about economic conditions.

The deal negotiated with China to end punishing tariffs on canola helps Manitoba as much as any province in Canada. U.S. tariffs on Canadian imports have also dropped from 30 per cent to 10 per cent, thanks to a U.S. Supreme Court decision earlier this year that said Trump could not unilaterally apply punitive tariffs.

The Trump administration is reportedly trying to devise a workaround, but there is a very real chance provinces like Manitoba could see very modest economic growth, which would lead to modest increases in revenues. Even modest growth could help Kinew and Sala trim the deficit, as they have promised to do.

Still, that is mostly a glass half full forecast for the upcoming fiscal year and there are no guarantees that bad news isn’t on its way.

The government is only budgeting $50 million for emergency responses. If this summer sees wildfires as bad or worse than last year, that budget line will be quickly overwhelmed.

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In terms of general economic conditions, the precipitous rise in oil prices, driven by the war in the Middle East, could spark fierce inflation, which could dampen consumer activity and lead to losses in sales tax. Inflation could also depress wage gains for this year, if employers decide to hold the line against the higher cost of doing business.

And then, there is Trump. Could he jack up tariffs again in defiance of the Supreme Court? Will his diversionary war in Iran — designed to distract Americans from his involvement in the life and times of disgraced sex offender Jeffrey Epstein — linger and throw the world into a recession?

The line between good and bad budget forecasts is so fine, it’s impossible to tell how accurate Manitoba’s will be. But there is one thing that is almost certain.

Kinew and Sala had some plausible deniability for last year’s massive increase in the deficit. That won’t exist if the NDP miss their fiscal targets as badly this year.

dan.lett@freepress.mb.ca

Dan Lett
Columnist

Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986.  Read more about Dan.

Dan’s columns are built on facts and reactions, but offer his personal views through arguments and analysis. The Free Press’ editing team reviews Dan’s columns before they are posted online or published in print — part of the our tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.