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Coronavirus infects provincial budget projections

Higher health care costs, lower revenues add up to bigger deficit

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Manitoba Finance Minister Scott Fielding finally got to introduce his 2020 budget today. However, in the midst of the novel coronavirus pandemic, his economic and fiscal projections are in a state of flux.

Fielding was to have delivered his budget March 11, but the Opposition NDP used procedural tactics to stall the government's legislative agenda. Since then, the financial impact of COVID-19 on the province's finances has become clearer, causing the government to release an 11-page "emergency supplement" to its budget today.

The government is now projecting economic growth in Manitoba for the coming year at just 0.6 per cent, after predicting growth of 1.3 per cent a week ago.

Before the latest COVID-19 budget update, Fielding was projecting to reduce the provincial budget deficit to $220 million in the new fiscal year, beginning April 1. (The latest deficit estimate for the current fiscal year is $325 million.)

MIKAELA MACKENZIE / WINNIPEG FREE PRESS

Finance minister Scott Fielding speaks to media about the delayed budget at the Manitoba Legislative Building in Winnipeg on Monday.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS Finance minister Scott Fielding speaks to media about the delayed budget at the Manitoba Legislative Building in Winnipeg on Monday.

The Finance Department made no new deficit projections in its budget update Thursday, but its revenue and expense projections are now less certain. It now says the pandemic could negatively impact government revenues by anywhere from $110 million to $482 million.

Meanwhile, the potential increased health-care costs — over and above what's budgeted — could rise anywhere from $50 million to $200 million.

A budget with bits for everyone, and COVID-19, too

Click to Expand

Posted: 19/03/2020 3:18 PM

The Pallister government is hailing its 2020 budget as the most emergency-ready financial plan in Manitoba's history, as it prepares for global economic uncertainty, a pandemic, and local emergencies such as spring flooding. 

At the same time, Finance Minister Scott Fielding said the document aims to make life more affordable for Manitobans so they can better ride out a financial storm with a provincial sales tax decrease. The one-point deduction was unveiled March 5; one of several budget highlights the government had already announced.


Deficit reduction

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Premier Brian Pallister said because of his government's efforts to get the province's finances in order during the past four years, Manitoba is in a better position to deal with the pandemic.

"Our province is stronger and more financially resilient than it has been in well over a decade," he told reporters Thursday.

The government had promised to deliver the most "emergency ready" budget in Manitoba history.

Fielding's financial blueprint adds $300 million to the government's rainy day fund, bringing it to $872 million by the end of the fiscal year. The government is also boosting an emergency expenditures contingency fund to $100 million from $43.8 million this year.

Pallister said Thursday the government has also identified $500 million in planned expenditures it can defer or redeploy if need be.

The premier had previously announced the two main planks in the budget two weeks ago.

The government plans to reduce the provincial sales tax to six per cent from seven per cent on July 1. It will also introduce a $25-a-tonne carbon tax that will take effect the same day.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS

The chamber at the Manitoba Legislative Building in Winnipeg.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS The chamber at the Manitoba Legislative Building in Winnipeg.

The province is assuming Ottawa will drop its current $20/tonne tax on Manitobans, a backstop levy for provinces without their own carbon tax set to rise to $30/tonne April 1.

The government estimates its PST reduction will save the average Manitoba household $345 per year.

The budget allocates a modest, $157-million increase to the health budget, boosting it to $6.8 billion. Education funding is increasing by $58 million to $3.003 billion. The Families Department budget is virtually unchanged.

However, the supplementary budget information released Thursday notes "additional costs will be incurred in most departments," due to the pandemic.

While the NDP prevented the government from introducing its budget for more than a week, it was in a more co-operative mood Thursday, allowing the legislative assembly to pass the budget in principle on the same day it was introduced.

The legislature also passed an interim supply bill allowing the government to pay its bills in the coming months.

The house was adjourned Thursday due to the coronavirus, with the political parties agreeing to reconvene the legislature as needed.

NDP Leader Wab Kinew said despite the week-long delay in introducing the budget, the government had little in the way of new measures to boost health-care funding or to improve the financial security of Manitobans affected by the pandemic.

"If you take into account simple things like population growth and inflation, there's no new money for health care," he said.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS
2020 provincial budget documents are at the Manitoba Legislative Building.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS 2020 provincial budget documents are at the Manitoba Legislative Building.

Also in today's budget:

— The government will continue to index the basic personal income tax deduction and income tax brackets to inflation. Indexing the basic personal income tax deduction will cost the government $16.2 million, Fielding said;

— The government will spend an additional $10 million to increase the numbers of cataract and joint replacement surgeries in a bid to reduce wait lists;

— An additional $188,000 is being allocated to the Cadham Provincial Laboratory to "respond to population-wide outbreaks";

— The government announced the role of the Manitoba Housing and Renewal Corp. will shift from providing social housing to that of funder and regulator;

— The government is allocating $101 million for the Lake Manitoba and Lake St. Martin outlet channel flood mitigation project, currently under environmental review;

— The budget includes a one-time capital investment of $45 million for "climate resiliency projects";

— The province is allocating $21.8 million this fiscal year, which it is keeping in reserve, for the City of Winnipeg's multibillion-dollar North End Water Pollution Control Centre. This would bring provincial funding for the project to $56.2 million to date;

— Vehicle registration fees are being reduced by 10 per cent, beginning with renewals after June 30;

— The provincial highways budget is increasing to $362.5 million from $350 million.

Fielding said the government will not deliver on an election promise to remove the PST on home insurance and salon services until next year's budget.

larry.kusch@freepress.mb.ca

Larry Kusch

Larry Kusch
Legislature Reporter

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.

Read full biography

History

Updated on Thursday, March 19, 2020 at 7:17 PM CDT: Final version.

8:34 PM: fixes typo

8:54 PM: Fixes typo

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