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This article was published 22/12/2009 (3588 days ago), so information in it may no longer be current.
The Selinger government is on track to post a budget deficit of almost $600 million this year, putting pressure on the province to withdraw even more money from its rainy day fund to avoid ending the year in the red.
The red-ink warning came Tuesday with the release of the province's quarterly financial report (April to September 2009) that forecasts a summary net income loss of $592 million for the 2009-10 budget year ending March 31.
The size of projected deficit — it could be larger at year-end — surprised no one as the province has been fighting off the recession with increased economic stimulus spending and was caught with a double whammy of unforeseen costs from the spring's flood ($41 million) and the H1NI flu virus ($109 million) this fall.
However, as recently as September, the province projected summary net income to be $48 million.
Finance Minister Rosann Wowchuk said the projected deficit reflects the reality of the global economic downturn and the slow pace of recovery.
"We've ridden it out fairly well, but we're not immune," she said.
Wowchuk said the numbers show the province is holding steady compared to other provinces as they, too, are running large budget deficits for the current year.
"All of them are much greater than ours," she said.
The province's mid-year economic performance and outlook, also released Tuesday, says Manitoba outpaced the rest of the country. Manitoba's economy is forecast to contract by 0.2 per cent in 2009, the smallest decrease among the provinces and better than the projected national decrease of 2.4 per cent. In 2010, Manitoba's economy is expected to grow 2.3 per cent and in 2011 by 3.1 per cent.
Wowchuk said the government can withdraw more money from its fiscal stabilization fund to offset the revenue shortfall. The rainy day fund at the beginning of the year had $864 million in it, with the province already budgeting to make a $110 million draw down on the account. About a third of the rainy day fund can't be used to balance the books as that money is dedicated towards health care.
"We could have additional revenues," Wowchuk added. "Some of our revenues could turn around."
Under Manitoba's new Balanced Budget, Fiscal Management and Taxpayer Accountability Act, budgeting is done over a a four-year period and allows for a deficit to be posted in one of those years.
Progressive Conservative finance critic Rick Borotsik said the state of the province's finances is more a reflection of Premier Greg Selinger, the former finance minister.
"These are not Wowchuk's chickens coming home to roost," Borotsik (Brandon West) said. "It's Selinger's flock."
Borotsik said while other western province's are also eyeing deficits, they've done more in recent years to pay down debt and sock away money in their own rainy day accounts than Manitoba.
"He didn't plan the last 10 years very well," Borotsik said of Selinger.
The quarterly financial report also shows that Manitoba will see a drop of $137 million in core government revenue as a result of lower corporate taxes and reduced federal transfers.
OTHER PROVINCES AND CANADA - 2009-10 PROJECTION
Projected Deficit 2009 GDP Deficit
($ millions) ($ billions) (% GDP)
Manitoba 592 50.0 1.2
British Columbia 2,775 187.8 1.5
Quebec 4,695 295.9 1.6
Alberta 4,324 268.2 1.6
Nova Scotia 525 33.4 1.6
Saskatchewan 1,047 60.0 1.7
Prince Edward Island 85 4.6 1.9
Newfoundland 750 29.5 2.5
New Brunswick 754 26.9 2.8
Canada 55,900 1,528.1 3.7
Ontario 24,716 563.7 4.4