Stefanson has lifeline; sinking city waiting for her to throw it Winnipeg, other Manitoba municipalities financially flailing after seven years of Tory grant freezes By: Dan Lett Posted: 3:15 PM CST Wednesday, Feb. 8, 2023 Last Modified: 9:26 PM CST Wednesday, Feb. 8, 2023 Updates

Opinion

Judging from the details provided at the release of its 2023 operating budget, it would not be an exaggeration to say that the City of Winnipeg is treading water, barely able to keep its head dry.

Property taxes will go up by 3.5 per cent and frontage levies by $1.50 per foot. But even with the additional revenue, most of which is dedicated to infrastructure, this budget is lean.

Core civic services will struggle with razor-thin increases in funding, and the balance in the city’s fiscal stabilization account is down to a dangerously low level.

It is not an exaggeration to say that Winnipeg is one inflationary crisis, huge snowstorm or epic flood away from a fiscal catastrophe.

There is some hope on the horizon.

Manitoba’s Progressive Conservative government has dropped hints about an increase in the main operating grant provided to Winnipeg and other municipalities. That would be significant because the Tories have — in what has to be among the most cynical acts by a provincial government in this province’s history — frozen that grant for seven consecutive years.

They have never fully explained why they capped support to municipalities. But as municipal property taxes went up, the Tories lustfully cut provincial taxes. So, we can assume that property owners partly paid the freight on those tax cuts.

Will the government remove the cap? Unfortunately for municipal leaders in Manitoba, Premier Heather Stefanson’s plan remains a bit of mystery.

In most years, the province would have already confirmed the total amount the city is receiving in its “basket” grant, funding that covers a variety of things, from ambulance services to basic operations and transit. For the past seven years, that figure has been $121.2 million.

This year, however, the province has yet to confirm the figure. It’s not clear why the government is holding back on such an important piece of budgetary information. A spokesperson would say only that the province intends to provide details of the operating grants as part of “the provincial budgeting process.”

That sort of ambiguity has a real impact on the city, which has been forced to do all of its calculations for the 2023 budget based on the $121.2 million figure.

If the province does come up with more money, then Gillingham and council have a real shot at stabilizing civic finances going forward and possibly — emphasis on possibly — shoring up some of its services.

If the province does come up with more money, then Gillingham and council have a real shot at stabilizing civic finances going forward and possibly, emphasis on possibly, shoring up some of its services.

The fact remains that even with improved support from the province, the city is facing some difficult times.

Thanks to the combined impacts of COVID, historically high snowfall and runaway inflation, Winnipeg ended last year with a record $83 million budget deficit. It is also predicting a high possibility of unfunded deficits in several key service areas, such as transit, in the current year.

Legally prohibited from maintaining a deficit from year to year, Gillingham and council will be forced to empty the city’s fiscal stabilization reserves and pray that inflation recedes and snowfall stays well within normal levels.

How likely is it that the province comes up with a significant funding boost?

Last November, then-municipal relations Minister Eileen Clarke told a gathering of the Association of Manitoba Municipalities a “more acceptable” funding model would be coming in the 2023-24 provincial budget, which is expected to be tabled sometime before April.

Unfortunately, thanks to a recent cabinet shuffle, Clarke has moved and it’s unclear whether her pledge remains in the grab bag of provincial budget priorities that Stefanson and new Finance Minister Cliff Cullen are considering right now.

It should be noted the government has already provided some additional support to municipalities as part of an unprecedented $850 million unbudgeted spending spree announced recently.

This unanticipated largesse — funded from a huge increase in own-source revenues driven by inflation — included $100 million for critical municipal infrastructure projects and $20.7 million in federal grants for public transit that Manitoba is finally passing along.

The province also confirmed a $40 million contribution to the $60 million cost of regional water and sewage service to CentrePort Canada’s lands near Richardson International Airport.

As a result, it would be inaccurate to say the Stefanson government is doing nothing to help Winnipeg and other municipalities. But by withholding details on the operating grant, it is still avoiding the fiscal elephant in the room: predictable, sustainable support.

As a result, it would be inaccurate to say the Stefanson government is doing nothing to help Winnipeg and other municipalities. But by withholding details on the operating grant, it is still avoiding the fiscal elephant in the room: predictable, sustainable support.

Municipalities need to be able to accurately predict how much money they will get from the province. And they need to know that funding is not vulnerable to the political whims of a premier that is willing to sacrifice civic services in pursuit of provincial fiscal priorities. That was certainly the case with former Tory premier Brian Pallister, author of the operating grant freeze.

A share of provincial revenues, perhaps through a share of the PST, makes the most sense. But that would require not just a commitment to thaw the freeze on operating grants, but also come up with a whole new funding formula.

One can only hope the Stefanson government comes up with a better and more generous way of funding municipalities before some of them drown in the seven-year tsunami of Tory austerity.

dan.lett@winnipegfreepress.com

Dan Lett
Columnist

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.

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