City out of book-balancing options; province steps up or things get ugly for Winnipeggers

Winnipeg’s 2026 budget, released Friday, is another reminder of just how thin the financial ice is at city hall.

A proposed 3.5 per cent property tax increase and a series of modest fee hikes — including a 10-cent increase in transit fares — are enough to keep the books technically balanced for another year. But only just.

Beneath the surface, the numbers reveal a city that is barely staying afloat as costs rise faster than revenues and as the financial tools used to stave off deeper trouble grow weaker every year.

The underlying story is familiar but worsening: Winnipeg’s expenses continue to rise at more than five per cent annually, yet revenues from the province are expected to grow by only about two per cent next year.

That gap alone would be a serious concern. But the city’s financial position is further strained by mounting wage pressures, inflation on construction and materials and growing demands on already stretched services.

Those demands are real and urgent. The city is budgeting for 135 new full-time equivalent positions in 2026, part of a total of 251 added from 2024 to 2026. These are, for the most part, not optional hires.

They are mostly police officers, firefighters and paramedics — the people residents rely on when they call for help — as well as much-needed bus operators to expand transit service.

But the cost of hiring those people and paying for their wage increases continues to put incredible strain on the operating budget.

The expense side of the city’s ledger is growing in ways that can’t simply be managed away. Yet on the revenue side, the city remains boxed in.

Winnipeg continues to rely heavily on property taxes and user fees — tools that barely keep up with the city’s basic operating needs, let alone its long-term infrastructure obligations.

What has allowed the city to avoid deeper financial trouble is the same set of tools that now appears to be reaching its limits: drawing down reserves, shifting surpluses from other funds and using asset sales to paper over structural gaps.

The 2026 budget puts it plainly, and bluntly: “Methods used to balance the budget, such as one-time transfers from reserves and asset sales, are nearly exhausted.”

That is a stunning admission for any municipal government to make.

The clearest sign of this is the state of the financial stabilization reserve, the city’s emergency cushion. It is projected to remain well below its minimum required balance of $85 million through 2026.

That leaves Winnipeg vulnerable to almost any unbudgeted risk — extreme weather, a spike in overtime demands, an unforeseen infrastructure failure or even fuel price volatility (not to mention the effects of the ongoing tariff war with the U.S).

The budget lists a number of high-risk pressures for 2026, but pointedly acknowledges the list isn’t complete. In other words, the city knows there are potential threats but no longer has a meaningful buffer to absorb them.

How long can this continue before the city is forced to start scaling back services?

Some will argue that Winnipeg should reduce spending or find efficiencies. Yes, the city can and should always look for ways to improve service delivery.

The 2026 budget includes language about prioritizing spending, collaborating with other levels of government and focusing on social equity and affordability.

Over the long term, innovation and efficiency matter. But even the most optimistic efficiency gains won’t come close to fixing what is fundamentally a structural revenue problem.

And yet, there is still no new funding deal with the province — no commitment to sharing growth revenues, no recognition that the city cannot meet its responsibilities without access to more stable and sustainable funding tools that grow with the economy.

Winnipeg remains stuck with a decades-old model that fails to reflect the financial realities of running a modern city.

Meanwhile, the infrastructure deficit continues to grow. Roads, bridges, water and sewer systems, recreation centres, libraries and transit infrastructure are all aging, and the city struggles to maintain what it already has, never mind expand or modernize it.

The city can only delay the inevitable for so long. Reserves are shrinking, costs are rising, the workforce is stretched and the revenue structure is stuck in the past.

At some point, Winnipeg will face a choice: either services will be cut, or a new fiscal deal must be struck (or property taxes will have to grow far beyond 3.5 per cent a year).

The 2026 budget doesn’t answer that question. It simply postpones the reckoning for one more year, using the last of the temporary solutions that have held things together. But the path ahead is narrowing, and fast.

If the province continues to offer only incremental funding increases while municipal costs grow far faster, the future becomes predictable: deeper deficits, service reductions, deteriorating infrastructure and frustrated residents.

The city needs a long-term solution, not another year of scraping by on shrinking reserves and stopgap measures. The sooner the province and the city acknowledge that, the better.

Time is running out.

tom.brodbeck@freepress.mb.ca