After nearly three years of speculation about how and when they would fulfill their main 2016 election promise, the Progressive Conservatives announced Thursday they would cut the provincial sales tax by one percentage point to seven per cent as of July 1. The announcement comes six years to the day after the NDP announced a PST hike to eight per cent, Finance Minister Scott Fielding said.
"While others are taking more money off kitchen tables all over the province – with higher municipal property taxes, higher Hydro rates and higher federal deficits – our government is lowering the PST, leaving that money where it belongs," the minister said in a prepared statement. "By the end of our second term, this rate reduction will save an average family of four around $3,000." The PC’s slogan for its 2019 budget, unveiled on Thursday, is "Getting the Job Done." Here are some of the highlights:
The Progressive Conservatives were adamant they would whittle down the provincial sales tax by one percentage point to seven per cent by 2020. By cutting the PST on July 1, the province will lose $237 million in revenue over nine months this fiscal year. During the 2020/21 fiscal year – the first full year affected by the tax cut – the province expects the move will save Manitobans $325 million.
The province provided three examples of how much Manitobans will save from the reduced PST: $30 when buying furniture or appliances for $3,000; $350 when buying a car or truck for $35,000; or $1,500 when buying a new home for $300,000 due to savings on building materials.
For those buying a $2 coffee, they would save about 2 cents.
Pulling Manitoba out of a deficit remains a cornerstone of the government’s budgeting. Deficit projection hasn’t change significantly from last year and the long-term projection shows a deficit of $28 million in 2022. The government is expecting a deficit this year of $360 million. When Premier Brian Pallister took office 2016, the deficit was hovering close to $900 million.
The tax cut is expected to lead to a $237-million loss for the government, however it’s expecting to buoy revenues with a $324-million jump in federal transfers.
Many governments base their financial health on the debt-to-GDP ratio, the difference between what it owes and what it's producing. It's a bellwether of the government's ability to repay debt, influences interest rates and affects credit rating scores. While debt is increasing, Fielding said his government is expecting the debt-to-GDP ratio to track down.
Overall spending per department is up slightly from 2018-19 – about $14.204 billion from $14.169 billion. Sport, Culture and Heritage will rake in an additional 20 per cent in funding (to about $104.5 million) for more operating expenditures and programs ahead of Manitoba 150 celebrations in 2020. Indigenous and Northern Relations will get the second-largest spending boost, up six per cent to around $33.3 million after no increase last year. Finance has the biggest spending dip behind employee pensions and other costs. The former category loses 2.3 per cent over 2018-19 levels, while the latter’s costs are reduced by five per cent.
Agriculture and Sustainable Development have the next biggest spending dips, losing about 1.5 per cent and 1.3 per cent over 2018-19 levels, respectively.
The Families department will get slightly more (0.2 per cent) funding than 2018-19, though money devoted to child protection is trending down. In February, Families Minister Heather Stefanson announced the province would be overhauling the way it funds Child and Family Services authorities. The 2019 budget didn’t offer many more details on the pivot to block funding, which will give the four CFS authorities more autonomy on how they deliver money to their 24 respective agencies.
The amount set aside for child protection is about $24.8 million less than 2018-19, for a total of just over $488 million.
The Progressive Conservatives said Monday in their third-quarter financial report they were on pace to spend $240 million less in the health department than previously budgeted. They said, however, that overall spending on health was expected to rise by $50 million over the previous year – on a budget of $6.5 billion.
In the budget, the province said it would spend $47.8 million more on health care this year – about $27.8 million in the health operating budget and $20 million devoted to the Emergency Treatment Fund for addictions.
The province also promised to lower ambulance fees again to a maximum $250 fee.
Manitoba spent the third-highest amount on health per capita last year, according to the Canadian Institute for Health Information, behind Alberta and Newfoundland.
The Tories pledged to invest $1 million to expand withdrawal management beds in Winnipeg and Brandon. The province will also spend $2.3 million targeting "drug-related criminal activity including methamphetamine and gang-related crime prevention initiatives," it said in a news release. Manitoba also signed a bi-lateral agreement with the federal government in December to access the one-time Emergency Treatment Fund, meant to create more flexible-length withdrawal and treatment beds for those dealing with addictions. That will mean $20 million more from the province and $4.2 million from the federal government over five years.
The he-said-he-said funding battle between the City of Winnipeg and the province has been well-documented. Municipalities are getting the exact same amount of basket funding and related grants this year as last year – $313.520 million.
It’s unclear from the budget numbers exactly how much Winnipeg is getting, though Fielding said the city can expect $113 million for three capital projects: Accelerated regional roads program; the Waverley-Taylor underpass; and bus rapid transit.
Support for Manitoba universities and colleges is dipping as Manitoba spends about $6 million less on operating grants and strategic initiatives. The province expects to reap an additional $25 million from tuition costs. Bursary funding remains stagnant around $22.2 million.
There were no projected cannabis revenues laid out in the budget document. Businesses don’t need to start remitting the social responsibility fee they charge on cannabis to the government until next June. The province has previously said it doesn’t expect to receive significant revenues from marijuana until two years post-legalization – when it will revisit how to share some of that money with municipalities.
"This isn’t going to be a major windfall," Fielding said, adding he expects there will be $20 million in cannabis-related costs. The budget does outline a possible in-year adjustment/lapse, which would cover fluctuations across all of government (including any surprise revenue from cannabis). The 2019 fluctuation is expected to be around $95 million.
Spending on provincial highways remains flat at $350 million after several years of cuts. However, Fielding highlighted an additional $45-million Manitoba 150 fund, of which the "vast majority" will go to roads and bridges and another $10-million fund for other roadwork.
Manitoba will set aside $50 million for its 2019-20 rainy day fund. The government predicts it will have $265 million put away in savings by March 31, 2020.
The province will boost its RCMP complement by 29 positions, adding funding for 27 more officers. There will be $325,000 provided to support victims of domestic violence and organizations such as the Canadian Centre for Child Protection, Brandon
Victim Services and Candace House, as announced in the throne speech. The province will almost double the Film and Video Production Tax Credit, which it announced would become permanent in January. Support will jump from $16 million to $31.5 million.
Jessica Botelho-Urbanski covers the Manitoba Legislature for the Winnipeg Free Press.
Updated on Thursday, March 7, 2019 at 4:30 PM CST: Updates lead paragraph
6:45 PM: Updates headline