Manitoba government projecting higher deficit than expected due to more spending

WINNIPEG -- The Manitoba government has announced a higher-than-expected deficit, raising more questions about its promise to balance its books by 2016.

The province's second-quarter update says the deficit for the fiscal year that ends in March is now forecast to be $402 million -- $45 million higher than set out in the spring budget.

The NDP has been running deficits since 2009 and originally promised to be back in the black by 2014-15. Two years ago, the target was pushed back to 2016-17. On Friday, even that target seemed flexible.

"It's our goal to do so, but we're not going to do it if it means cutting health care or front-line services," Finance Minister Greg Dewar said.

"I've had a chance to meet with people ... at budget consultation meetings and at town halls, and they have reinforced with me that our government should continue to focus on providing services for families and ... making sure we have a strong health-care system --and that's what we're doing."

The update also revealed that for the second year in a row, the government is not spending all of the money raised by last year's provincial sales tax increase on infrastructure. After raising the tax to eight per cent from seven, the NDP promised to spend every cent on roads, bridges, flood-fighting measures and other core infrastructure projects.

The tax hike is to bring in an extra $276 million this year, but infrastructure spending is $218 million higher. The rest of the money was part of the government's general revenues and used elsewhere.

Dewar said the government will spend the $58 million difference, along with an unused $75 million from the previous year, in the future. Construction was hampered this year by poor weather, he said.

"The commitment rolls over to next year," he said.

"We have a very short construction season here in Manitoba and we've had water -- it was raining. There was flooding."

Brian Pallister, leader of the Opposition Progressive Conservatives, said the fiscal update shows the government has been unable to control spending.

"Manitobans are right to ask, 'Why are we paying the highest increase in taxes in Canada and you're still not able to get your books under control and balanced?"'

The figures show government spending was up in a number of areas, including health care and child welfare. Heavy summer rains that flooded a lot of farmland in southwestern Manitoba also caused a spike in spending, Dewar said.