For roughly a decade, the NDP provincial government annually reported a balanced summary of accounts (core government operations plus the surplus and deficits of Crown Corporations and other government controlled entities). That streak ended with the global recession (2008-2009, was the worst of it) and the government’s response to it: stimulus spending requiring increased borrowing.
Now, with the provincial economy basically recovered (gross provincial product now exceeds the level reached before the recession), there still seems to be no certainty whatsoever as to when annual balanced summary accounts for the provincial government will reappear. (The federal government has reported confidence in its plans to balance its books, now suggesting it could occur as early as its 2014/15 fiscal year.)
Publius understands that Manitoba’s Finance Minister recently indicated that the Selinger government’s most recent claim/promise/forecast that its summary accounts would be in balance for its 2016/17 fiscal year (an earlier forecast suggested an end of deficits in 2015/16) is now, like the previous forecast, unlikely to be realized. Apparently, the reason given for this ‘change of heart’ is that the government is unwilling to ‘sacrifice’ services to bring it about.
In its 2012 budget, the provincial government expanded the list of goods and services subject to the PST, and, as well, upped a wide range of other fees. In total, the annual take was estimated in the range of $280-million.
In the latest budget, the government, ignoring a legislative requirement for an approving referendum, upped the rate of the PST from 7% to 8%, a further annual increase in revenues from the measure in the range of $300 million. During the 2011 election, there was no mention of these additional ‘takes’ from government, Premier Selinger scoffed at the prospect of his government raiding taxpayers’ pocketbooks.
So, while the economy has recovered and the Selinger government has increased its annual levies on taxpayers by $600-million, the government still cannot ‘foresee’ the year it will be able to balance the Province’s books. While Publius notes the government’s claims of increasing its investments in provincial infrastructure, he is also aware that such investments are not charged against the summary accounts in the year of the expenditure but amortized over the expected service lives of the new or enhanced infrastructure.
Initially, it was expected that a provincial election would occur in the fall of 2015, now, with the prospect of a federal election at that time, it is more likely the provincial election will be deferred to the spring of 2016. From the Finance Minister’s lack of confidence that the government will be able to balance its books for its 2016-17 fiscal year, it seems clear that the government is already planning to unleash more spending, and borrowing, in the hopes of re-election.
We are not ‘looking at’ a revenue problem, we are ‘seeing’ a government unable to restrain itself from spending, with announcements seemingly coming daily, even though we are still more than two years away from an election. Will the public realize that it is being ‘wooed’ with its own money? Or, more accurately, with its own money plus what money the government can borrow.
Is the taxpayers’ only hope the intervention of the credit rating agencies and the bond market?