Manitoba ends fiscal year $2.1B in deficit mostly thanks to COVID-19

COVID-19 wreaked havoc on more than just the health of Manitoba citizens — $2.1 billion is being added to the province’s debt load thanks mostly to the pandemic.

Manitoba Finance Minister Scott Fielding gave the update Thursday, saying spending to stem COVID-19 waves and lower revenue from taxes and Crown services means the budget was not balanced for the fiscal years 2020-21.

“COVID-19 has left a significant mark on Manitoba and really required an unprecedented response in really every facet of society and the economy,” Fielding said.

“The past 18 months have been the most significant health and financial challenge — or even crisis, I would suggest — really, in the last century.”

A large deficit, however, was predicted and expected.

In 2019-20, the province ended the fiscal year with a $5-million surplus, but then-premier Brian Pallister said they expected a large deficit jump for the next year due to the coronavirus.

The pandemic appears to have affected more than just the health-care budget and has had a noticeable impact on revenues as well.

Corporate income taxes came up $97 million short, and income tax revenues were under budget by $325 million.

Other taxes, such as payroll and PST, were short by $281 million.

And income from government businesses such as liquor, casinos and pot was down by $147 million.

1:38 Coronavirus: Manitoba’s projected deficit shrinks to $2B, finance minister says

Casino revenues, for exampble were down more than 80 per cent from the previous year.

That was partially offset by a boost in online gambling and higher liquor and cannabis sales.

A more detailed breakdown of Manitoba Liquor & Lotteries loses — including pot, liquor, and gambling revenues — is expected in an annual report from the crown corporation Friday.

Some of the province’s financial woes were offset by federal money flowing in for pandemic relief, including $730 million.

Spending over budget

On the spending side, a few departments — including health — ran well over budget as the government responded to the pandemic.

There were also hundreds of millions of dollars in new pandemic aid programs, such as wage subsidies for businesses and one-time cheques mailed out to seniors.

Some of the subsidy programs were underspent, however. The documents show very few people took up a subsidy offer for staffing in child care and other facilities. Wage subsidy programs for summer jobs for young people saw millions of dollars left on the table.

Leftover money will be moved to other areas as an anticipated fourth wave of the pandemic arrives, Fielding said.

1:58 2021 Manitoba budget breakdown

“We’re well-positioned to support businesses and individuals.”

The province announced in April that it would be budgeting $1.2 billion for the coronavirus pandemic for the 2021-22 fiscal year.

Meanwhile, the Progressive Conservative government expects the deficit to shrink to $1.5 billion this fiscal year as the economy recovers.

Federal transfers are expected to jump, partly due to a recent child-care funding agreement the province signed with Ottawa.

But challenges remain.

More than a year of dry weather has left rivers low and Crown-owned Manitoba Hydro unable to meet export targets. As a result, the government is expecting to $2 million in net revenue from the utility, down from $190 million predicted in the spring budget.

Manitoba has registered deficits in every year but one of the last 11 years. The province’s net debt is forecast to approach a record $30 billion this year, equating to almost 40 per cent of gross domestic product.

Manitoba passed a law earlier this year to go back to balanced budgets within the next eight years.

–With files from Steve Lambert at The Canadian Press