The Government of Manitoba’s new budget will cut the provincial sales tax (PST) from 8 per cent to 7 per cent, increase the amount of basic tax exemption and significantly decrease funding to programs and organizations reliant on provincial support.
Those who rely on provincial funding are working to figure out how these cuts will affect Manitobans and who will pay for what the province will not.
Lynne Fernandez, who holds the Errol Black Chair in Labour Issues with the Canadian Centre for Policy Alternatives, says most people in Manitoba will feel the impact of the cuts as they begin to impact services.
“In a negative way, I think it affects almost everybody except the wealthy, because the eventual erosion of services, health care and education affect almost everybody,” she says. “It will have a particularly negative effect on low-income people.”
Though, in the long run she says even wealthy Manitobans will see its effects.
Fernandez says the new provincial budget is “very much an austerity budget, in the sense that they’re worried about the effect of the deficit and debt on the province, and their way of dealing with that is to cut revenues and services.
“It’s also very much concerned with tax. It’s a very anti-tax government, and they are, I would argue, illogically cutting taxes such as (the PST) and increasing the amount of the basic personal exemption, which ends up doing more damage to our fiscal situation than improving it,” she says.
These cuts will not only affect services provided by the provincial government, but they will also affect independent organizations, institutions like universities and incentive programs that rely on government grants.
“Tuitions are going to go up, and there’s a decided lack of investment in things that are required,” she says. “They’re also leaving money on the table that they could be accessing from the federal government, money for health care and housing but which requires matching funding from the Province, and their refusal to match that funding means that they’re throwing money away from the feds.”
Dr. Annette Trimbee, the president of the University of Winnipeg, released a statement regarding the 0.9 per cent cut to the school’s operating budget, which mirrors the cut from last year’s budget and its expected effect on tuition.
“According to legislation, tuition is projected to increase by 7.5 per cent. While our students pay much less than the national average, a student taking a full-time course load will likely pay $250 more than last year,” the statement reads.
While these are significant and impactful changes, Fernandez says the party is delivering on promises it made before the election and that this is consistent with the government’s attempts to look fiscally responsible.
“They see this as speaking to their base and even beyond their base, because it seems that a lot of people get excited about a tax decrease without necessarily thinking about what the implications are,” she says. “I think a lot of their messaging is misleading.”
The new budget comes shortly after Winnipeg’s municipal election and about a year-and-a-half before Manitoba’s next election, which will have new restrictions on provincial voting.
Fendandez says depending on what happens in Alberta’s election, there may be a shift to the right for Manitoba’s Progressive Conservative party in line with what seems to be happening in other provinces.
“I think there’s a chance that (Pallister)’s looking at the reforms that Ontario is going through in education in particular and in health care and the labour market,” she says “We’ve speculated that he’s watched very carefully what Brad Wall was doing in Saskatchewan.”
“We can only speculate, but you have to wonder if he’s watching how things are going in other provinces and wondering if he can get away with it here, too,” she says. “I would be surprised if he weren’t looking.”
One of the areas cut was the roads and highways budget.
Councillor Scott Gillingham, chairperson for the City’s standing policy committee on finance, says from the City’s perspective, “the challenge is that the City was not informed of this decision by the Province of Manitoba until long after the City had passed its 2018 budget. In fact, the City did not receive written confirmation that the Province was not intending to fulfill the 2018 roads budget funding until January of 2019.”
Gillingham stresses the City really values consistent communication with the Province and having certainty of what kind of funding will come from the Province.
Unlike the provincial and federal governments, municipalities cannot run deficit budgets, and they have to adopt a balanced budget every year.
“What the City needs and what municipalities need is a long-term, predictable, growth-oriented funding model” that invests in the services and infrastructure that governments are responsible for and provides room for grant programs to third-parties, Gillingham says.
Gillingham says when the City is working on their budget, they adopt an operating budget, a capital budget and a five-year capital forecast, which allows city council to do more long-range planning of major projects.
They are also moving to a model of adopting four-year budgets, “and so when the City finds out 13 months after adopting the capital budget that funding we relied upon is not going to be there, it’s very problematic,” he says. “Ultimately, it’s Winnipeg taxpayers who are left to pay the bill, and that makes it very challenging for council to make plans and rely on funding.”
Mayor Brian Bowman has been publically critical of the cuts and the fiscal stress it imposes on the City of Winnipeg.
While Fernandez isn’t sure that voters are going to get the message, she thinks “it’s super interesting what’s happening here with Bowman coming out on the offensive. I think he’s been quite clever to connect the problems Winnipeg has with lack of funding from the provincial government.
“Bowman is going with the knee-jerk citizen concern, which is roads, but he could be going with poverty reduction or talking about climate change. The fact that the Province is doing nothing about those things means that the municipalities are left holding the bag,” she says.
“There’s a whole suite of things that the City needs help from the Province for that it’s just not getting,” she says, citing the City’s $7 billion infrastructure deficit as a prime example.
“The provincial finance minister said that Winnipeg has a spending problem and doesn’t have a revenue problem, and that is the most ridiculous statement that’s been made this year. And at the same time, if the City increases taxes at the necessary amount, the Province would be critical of that, too,” she says.
The ultimate takeaway here is to see through the Province’s rhetoric and look at what their policies will do, she says.
“They keep talking about how the PST decrease and raising the personal exemption is putting money on the table, but it’s putting really ridiculously small amounts of money on the table unless you’re spending a lot of money,” she says. “These are not policies that are going to do anything about poverty in Manitoba.”