2025 Manitoba budget forecasts deficit as high as $1.9B if tariffs continue
The second budget from Premier Wab Kinew's government, released Thursday, forecasts that a continuing 25 per cent tariff on U.S. imports, along with retaliation from the Canadian government, could drag down economic activity and reduce incomes in Manitoba by $1,420 on a per capita basis.
The province says it's prepared to spend up to half a billion dollars to support tariff-affected businesses and workers to cushion against what could be Manitoba's worst recession since 2009.
Finance Minister Adrien Sala asserted Manitoba is as ready as possible for any economic turbulence.
"We're starting from a place of strength," he said during a breifing with reporters at the legislature Thursday, calling the budget one that "meets the moment" Manitoba is facing.
If current trade tensions with both the U.S. and China recede, the forecast deficit will be $794 million, but even that target is based on the assumption Manitoba will rake in more revenues than ever before.
University of Winnipeg economist Philippe Cyrenne says it's unrealistic to expect provincial sales tax and income tax revenues in particular to significantly rise during turbulent economic times.
"Would you take this document to a bank and try to get a loan? I think it would be dfficult," Cyrenne said.
He said it's clear much of the budget was prepared before tariff threats materialized.
"This looks like it was put together a month ago," Cyrenne said.
"Trying to put together a budget in these times is very challenging."
Tariff contingencies
Even in a scenario without the tariffs, the province's $25.9 billion budget forecasts $1.7 billion in increased spending across the board -- a seven per cent increase over the last budget.
If the tariffs continue, the budget includes $500 million for a "tariff response contingency," along with $600 million for a "revenue contingency" -- which together would drive the deficit to $1.9 billion, the province says.
The $500 million for tariff response contigency includes $100 million to help businesses find new markets and $100 million for loans, along with $100 million for the agriculture sector and $100 million in case the demand for government programs and services grows.
There's also $50 million to help post-secondary institutions retrain workers, $25 million in increased student loans and $10 million in student aid grants.
Manitoba's total debt is $36.6 billion, up $1.4 billion from the previous year, according to the budget.
Boosting infrastructure spending
As for other spending, the health department will get an extra $1.2 billion this fiscal year, for a total of nearly $9.4 billion.
The 2025-26 spending plan also prioritizes building new infrastructure in an effort to create jobs, Sala said.
The province is vowing to build 11 new schools in the next three years and begin construction this year on the new emergency department and Mature Women's Centre at Victoria Hospital in Winnipeg and the new ER in Eriksdale.
Construction will start this fiscal year on four of the schools: a new school in Brandon's southwest quadrant, as well as the previously announced builds in Devonshire Drive West and Prairie Pointe in Winnipeg, along with one in West St. Paul.
New schools are also planned in future years in Winnipeg's Bridgwater Lakes, Highland Pointe and northwest quadrant, along with a French-language school in St. Boniface. Outside the provincial capital, there are plans for a new French-language school in Brandon and a new school in Neepawa.
The government is also pledging to start construction on a new personal care home in Arborg, in addition to previously announced facilities in Lac du Bonnet and Winnipeg's Transcona neighbourhood.
Construction will also start this year on building a health-care centre of excellence, planned for the Portage Place redevelopment in downtown Winnipeg.
The province is also committing $73.4 million to its strategy, announced late last year, for moving people living into tent encampments into more permanent housing.
The funding includes $25 million to open a navigation centre where outreach staff can connect with the people living in encampments, as well as $16 million to renovate a downtown Winnipeg building to provide transitional housing for 118 people.
Business supports
Thursday's budget also pledges to help businesses by reducing payroll taxes. Beginning next January, the threshold at which businesses pay the tax will rise to $2.5 million, up from the current $2.25 million. The threshold for the second, higher rate will rise to $5 million from $4.5 million. The government says 875 businesses will be better off.
Businesses can also apply for a new security rebate program that offers up to $2,500 per company.
The previous rebate program, which offered a maximum $300 rebate to businesses and homeowners and was quickly oversubscribed, will return, but only an additional $2 million will be provided.
Manitoba will expand its free prescription birth control program by extending coverage to Plan B, commonly known as the morning-after pill, and copper IUDs.
In other tariff countermeasures, the government will end its contract with a U.S. firm that provided online purchasing options for provincial park passes. The province will make park entry free of charge for this year.
As well, Teslas and electric vehicles manufactured in China will no longer be eligible for the province's EV rebate program, Sala said.
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