Province’s rainy day has come
NDP cuts back on debt reduction to balance the books
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Hey there, time traveller!
This article was published 26/03/2009 (5065 days ago), so information in it may no longer be current.
The Doer government will withdraw $110 million from the province’s rainy day fund and sharply reduce debt payments to balance the books on a $10.2-billion budget that increases core spending by 4.4 per cent.
Finance Minister Greg Selinger said Wednesday the government will amend the province’s balanced budget legislation to allow it to cut back on debt repayment.
In 2009-2010, the NDP will contribute $20 million towards paying off the debt, compared with $110 million for the current fiscal year ending March 31.
"We remain committed to providing vital services while paying down our debt," Selinger said in his budget address. "However, we must do so in a responsible way, reflecting the current economic environment, slowing down some of our commitments and only implementing initiatives that are sustainable within a balanced budget framework."
He told reporters that although the government is seeking more fiscal wiggle room on debt repayment, it is taking other measures that will reduce the province’s long-term debt, including spending $136 million to cover its share of current service pension obligations.
The province’s net debt is projected to rise to $11.8 billion — or $9,717 per person — from an estimated $11.1 billion for the current year that ends on Tuesday.
Finance officials said one of the reasons for the increase is a $625 million boost in infrastructure project spending — to $1.6 billion — in the new budget, a move that Selinger estimated will create the equivalent of 10,000 jobs for one year.
The budget projects provincial revenues will increase 2.9 per cent in the coming fiscal year. That includes relatively flat provincial tax revenues (up 0.9%), a healthy boost (4.7%) in federal transfer payments and a 6.6 per cent increase in income from fees, commissions and licences.
Selinger said his summary budget — including Crown corporation performance and pension obligations — projects a $48 million surplus for the fiscal year beginning April 1.
However, when looking at core government operations only, the minister projects spending to reach $10.22 billion and revenues to hit $10.13 billion for a shortfall of about $88 million.
The 4.4 per cent hike in government spending this year compares with the 6.2 per cent increase projected in last year’s budget.
"Many of the departments are going to be quite constrained (in their spending)," Selinger said.
John McCallum, a University of Manitoba economist, said Selinger’s budget seems to presume a fairly deep — but short — economic downturn.
"But if you think that this recession and slowdown is going to linger well into 2010, my feeling would be that a lot of the dollars that they spent today, they’ll wish they had to spend in a year or two," he said.
Meanwhile, Selinger said that the province’s net debt-to-GDP (gross domestic product) ratio has gone down by more than 25 per cent since 1999, when the NDP came to power.
The province’s debt servicing costs, he said, have been cut during that time by 55 per cent — from 13.2 cents of every dollar of revenue in 1999-2000 to six cents in the coming year.
Tax cuts an nounced last year continue in the 2009-10 budget
Small business tax drops to zero before end of 2010, down from eight per cent in 1999 General corpor ate income tax rate drops to 12 per cent in July, 2009 Phase-out of the General Corporation Capital Tax continues, with tax to be eliminated by end of 2010
Lowest income tax bracket tax rate drops to 10.8 per cent from 10.9 per cent Middle tax bracket threshold rises to $31,000 from $30,544
Top income tax bracket threshold rises to $67,000 from $66,000
Amounts used to calculate the Personal Tax Credit rise by at least 2.6 per cent
Larry Kusch didn’t know what he wanted to do with his life until he attended a high school newspaper editor’s workshop in Regina in the summer of 1969 and listened to a university student speak glowingly about the journalism program at Carleton University in Ottawa.