Toba posts $501-M deficit

September 28, 2010

Debt Continues to Soar

Winnipeg - The Selinger government posted a staggering $501-million deficit in 2009-10, up from the original $88 million the NDP had projected in its spring 2009 budget.

That’s according to the province’s public accounts released Monday.

What’s worse, government has no plans to bring the province’s finances into the black until at least 2014, which according to the finance department’s own numbers would add close to $2 billion to the province’s already burgeoning debt.

And it’s not because of any ongoing recession. Manitoba’s economy is projected to grow at a respectable 2.6% this year and continue to grow the following year.
So why the massive deficits?

Finance Minister Rosann Wowchuk says her government has to spend heavily to continue to provide the front-line services Manitobans want. She insists her government is spending within its means, yet has trouble explaining why — now that we’re out of recession — her government can’t bring its spending in line with revenues.

Instead, the NDP government has projected to post a $537-million deficit again this year with no signs of that number coming down, not even in the face of a stronger economy.

I could understand if the province had posted a modest deficit last year given the fact Manitoba was in recession and experienced revenue declines.
Even then, the Manitoba economy only contracted by 0.2% last year, nowhere near the national drop of 2.5%.
Which means there’s no reason in the world the Selinger government had to put taxpayers in the glue by $501 million. That’s 25% more than Manitoba Justice’s entire $402-million annual budget. It’s a lot of money.

But perhaps most worrisome is that there are no plans to bring the books back to surplus for at least another four years.
The Selinger government has created what economists call a structural deficit. The economy is back on track yet government has increased its spending to levels well beyond what it can afford during normal economic times.

Wowchuk at first told reporters Monday that her government has no plans to bring the province’s core government operations into the black by 2014.
But she later had a staff member tell the Winnipeg Sun that in fact her department does have a plan to balance the books by 2014 and that perhaps the minister just forgot.

Whatever the case, it’s cold comfort for those looking for some level of financial responsibility from their government.
Instead, Wowchuk tried to argue Monday that her government brought the deficit down last year because the shortfall could have been far worse than it was.
Pretty weak.

Her department also continues to include revenues from Crown corporations like Manitoba Hydro when calculating government’s bottom line in order to mask what is in fact a very large deficit.

The emphasis is on trying to hide the massive deficits rather than being accountable for them.
For taxpayers it means billions more in debt will be added to an already growing mound of debt, which their grandchildren and future generations will have to repay one day.

Overall debt under the Selinger government — excluding Crown corporations and pension liabilities — has soared to $10.9 billion this year from $7.98 billion in 2005. That’s a $2.92 billion increase in the provincial debt over five years, or a 37% increase.

If the books are not balanced until 2014, close to $2 billion more will be added to the debt, according to government’s own long-term financial outlook.
Hang on to your wallets, folks.
It’s going to be a rough ride.
Source:  Tom Brodbeck, Winnipeg Sun