March 23, 2010 / 10:46 PM / in 8 years

Manitoba forecasts C$545 million budget deficit

VANCOUVER (Reuters) - The Western Canadian province of Manitoba projects a C$545 million ($534 million) deficit in the coming fiscal year as it tries to control spending in the C$13.3 billion budget it released on Tuesday.

The New Democratic Party government also unveiled a five-year plan it said will include using its rainy day fund to control debt and return to budget surpluses by 2014.

The plan will require a change to Manitoba’s balanced-budget law, but doing that is better than slashing core services such as health and education, Finance Minister Rosann Wowchuk said.

“While these cuts may save money in the short term, the cost of repairing this neglect is much larger in the long term,” Wowchuk said.

Spending will be cut at most government departments, but increased for health and education, officials said.

Total spending in fiscal 2010-11, which starts in April, was projected at C$13.3 billion, up from C$13 billion forecast for 2009-10, while revenues will rise to C$12.7 billion from C$12.5 billion.

The 2009-10 budget is now expected to end with a C$555 million deficit, compared with the C$48 million surplus that was projected when it was unveiled a year ago.

Public sector employees will be asked to accept a wage freeze and provincial cabinet members will see their salaries cut by 20 percent, Wowchuk said.

Earlier plans to cut the province’s corporate and personal income tax rates have been delayed until the economy is stronger, Wowchuk told the provincial legislature.

Total capital spending will be nearly C$1.8 billion.

($1=$1.02 Canadian)

Reporting Allan Dowd; editing by Rob Wilson

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