• The Manitoba government will cut the deficit by more than half to $796 million in fiscal 2024-25.
  • It is expecting an aggressive 8.7% boost to revenue with the vast majority coming from federal transfers.
  • Expenditure will grow modestly to $24 billion (2.8%) after last year’s spending spree (7.3%).
  • The provincial debt burden is expected to be the heaviest on record, reaching 39.1% of gross domestic product by fiscal 2025-26.

Government cuts 2024-25 deficit, pushes out plans for balance

Expectations for Manitoba’s 2024 budget were set high. Not only did the province vow to eliminate the deficit within its first term, but big spending plans were also promised. Budget 2024 does chart out a plan to hit both goals, but it doesn’t leave much wiggle room to respond to unforeseen hurdles.

The government now projects a $796 million deficit in 2024-25, less than half of the whopping $2 billion shortfall estimated in fiscal 2023-24. Robust revenue growth (8.7% y/y)—mainly from federal transfers—will play a major role in shrinking the deficit in the upcoming fiscal year. Expenditure growth, on the other hand, is expected to continue at a reasonable pace of 2.8%. This pattern over the course of the fiscal plan will eliminate the deficit by fiscal 2027-28.

Manitoba’s debt burden, however, will continue to grow over the next two fiscal years—reaching a new high of 39.1% in 2025-26.

Multi-faceted spending plan keep expenditure rising

Expenditures are expected to reach $24.1 billion in 2024-25, representing a modest increase of 2.8% after settled collective agreements for health and long-term care unexpectedly drove up spending last year (7.3%).
Most of the $660 million increase is set to come from education and early childhood learning ($283 million) to fund higher operating costs for public schools, reducing class sizes for kindergarten to grade three students, among other initiatives.

The 2024-25 allotment for housing, addictions and homelessness will add another $83 million including new funding for social and affordable housing.

Healthcare remained the largest spending line item—though a large funding boost in 2023-24 kept this year’s increase relatively muted both in dollar ($78 million) and percentage growth (1%) terms. The $8.2 billion healthcare allotment will fund a multitude of initiatives with the most significant amounts going to recruitment and training of more healthcare workers as well as to support the conversion to electronic patient records with new plastic health cards.

More tax reforms and rebates promised

Tax changes were, once again, a big theme in Budget 2024. The province announced reforms to existing school tax-related credits and rebates, replacing the 50% property tax rebate and $350 education tax credit with a flat $1,500 credit. Not all households, however, will be on the receiving end of this measure. The change is set to shift more of the property tax burden onto owners of more valuable properties ($850,000+), while exempting less valuable homes (under $437,000)—generating an additional $37 million in tax revenue.

Phasing out of the basic personal tax credit for those with a net income range of $200,000 to $400,000, eliminating sales tax commissions, and a new vaping tax are set to generate another $7.1 million in new revenue in fiscal 2024-25.

However, other tax reforms are projected to more than offset the newly generated income. These initiatives include a three-month extension of the gas tax holiday to September 2024, a new rental housing construction tax credit, and an increased renters tax credit, among others.

Overall, tax changes in Budget 2024 are expected to cost the government $55 million in forgone revenue this fiscal year.

Larger federal transfers are set to make up most of the increase in income as in previous years. An aggressive boost to federal transfers (17%) will prop revenue growth up to 8.7% in fiscal 2024-25—the fastest growth rate in over a decade (outside of the pandemic recovery years 2021-2023).

This raises some concern over Manitoba’s dependency on federal transfers—which are now set to make up 36% of total revenues—the highest share in 30 years.

Investing more in infrastructure

The budget included a capital investment plan worth $16 billion over the next five years, including $3.2 billion in fiscal 2024-25.

The bulk of the new funding ($1.3 billion in 2024-25) will be dedicated to buildings, equipment and technology including design and construction work to build a new Victoria Hospital emergency room.

Province veers off reducing debt burden course

Budget 2024 projects a 38.5% net debt-to-GDP ratio in fiscal 2024-25—a noticeable upward revision from the 35% forecast for the year in the previous budget. From there, the government sees the debt burden rising to 39.1% in 2025-26—the highest in the province’s history—before making a modest improvement to 38.3% by fiscal 2027-28.

We’re disappointed about the trajectory of Manitoba’s indebtedness over the next two fiscal years, given the province’s higher net debt burden relative to most other provinces.

It will drive up debt service costs, taking spending capacity away from other items like healthcare and social services. In fact, this is already in motion with debt servicing costs eclipsing the amount spent on families in the last fiscal year and that margin is set to grow in 2024-25.

Higher indebtedness reduces Manitoba’s fiscal flexibility to respond to unexpected events.

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