MB: Public Accounts Show Significant Progress Lowering the Deficit
Sep. 27, 2019
Global Korean Post
The Manitoba government has made unprecedented progress reducing the province’s deficit to move towards balancing the budget and has invested $407 million in its rainy day fund to ensure money is there when Manitobans need it most, Finance Minister Scott Fielding announced today with the release of the government’s public accounts for the 2018-19 fiscal year.
The year-end financial results show a deficit of $163 million, which is $358 million lower than the budgeted deficit of $521 million. Compared to the 2017-18 deficit of $695 million, this represents the largest-ever year-over-year reduction to the deficit in Manitoba history.
“We have made significant progress fixing the province’s finances and at the same time substantially increased funding for health care – investing $347 million more last year than the former government budgeted in 2015,” said Fielding. “Last year, we invested $205 million more in Manitoba Families and $247 million more in education, while virtually every department was within budget.”
The minister noted since the province is ahead of schedule in reducing the deficit, it is taking action to replenish the rainy day fund the former government depleted. Manitoba is increasing its transfer into the Fiscal Stabilization Fund to $407 million for 2018-19, above the initial budgeted transfer of $50 million, he said.
“Our province has had several good years with lower-than-budgeted expenses for floods, fires and other emergencies, but we know this won’t always be the case,” said Fielding. “Taking these savings and putting them in the rainy day fund is responsible financial management that will help protect Manitobans from unforeseen emergency expenses down the road.”
Fielding noted in addition to fiscal discipline and expenditure controls, the improvement in the province’s fiscal position is due to unexpected one-time revenue increases from growth in the economy and other factors. The results have been buoyed by favourable, one-time events like higher net income reported by Manitoba Hydro and Manitoba Public Insurance, as well as higher income tax revenue due to the unwinding of tax planning measures following federal tax changes.
In addition, a one-time accounting adjustment was made for Manitoba Health, Seniors and Active Living, as previously announced in the third quarter report. Health spending increased in 2018-19 and the health department ended the year $102 million higher than the year before, the minister added.
“Since forming government, we have implemented better budgetary practices and are putting Manitoba back on a path to long-term fiscal sustainability,” said Fielding. “For the third year in a row, the results show we are moving in the right direction but significant effort continues to be required.”
The minister confirmed the province has revised its mid-term forecast to adjust for a higher-than-expected starting point for income taxes, as well as a marginally slower economic growth rate being seen across Canada. While it is too early to identify any changes to the deficit estimate of $360 million for the current fiscal year, it is projected the province will return to balance in 2022, he said.
“Our success has not been a single decision or action we are taking,” said Fielding. “Rather, it’s the cumulative effect of thousands of smaller, yet critically important, decisions that are getting us back on track.”
Fielding noted debt-servicing costs continue to be a concern in the government’s pursuit of financial recovery. The results show for the first time in Manitoba’s history, $1 billon has been spent to service the province’s debt – costs equivalent to the fourth-largest department of government. These costs are a direct result of increased debt and three consecutive credit rating downgrades due to 17 years of fiscal mismanagement by the former government, the minister added.
“Taxpayer dollars spent servicing debt is money that cannot be invested in priority areas like in health care, education, social services and infrastructure,” said Fielding. “We continue to take action to reduce the deficit in a measured and responsible way because we know fiscal sustainability is essential to protecting the services Manitobans value and rely on – and making life more affordable in our province.”