This column was originally published in the Winnipeg Free Press and is now free to reprint.
Sometimes procrastination pays off. There’s always a chance a bonus at work will come just in time to cover a credit card balance that’s been ignored. But putting off today’s problem usually leaves a bigger problem for tomorrow.
The Manitoba government is procrastinating on the province’s financial problems. It’s ignoring that fact that it’s spending too much and hoping higher revenues will balance the budget. Theoretically, that might work, but procrastination comes at a high price.
The government is planning to spend $840 million more than it brings in this year. That’s a little less than last year’s budged operational deficit of $911 million. But, in the context of a budget of $17 billion, that isn’t a real step forward – it’s barely a shuffle.
Billion-dollar denominations boggle the mind so let’s consider them in terms of a family budget.
Imagine the government is a family with an income of $75,000 per year. In that scenario, it would have spent more than it brought in by $344 every month last year. This year, that family would still be blowing its budget by $308 every month. Any financial advisor would give that family important advice: spend less money.
Unfortunately, provincial spending is going up by $520 million in this budget when compared to the previous budget. The government is counting on revenues to go up by $626 million to achieve its almost imperceptible improvement. In fact, the province plans to keep increasing spending for the foreseeable future and while it counts on revenues to keep increasing to very gradually shrink the deficit.
The bond rating agency DBRS captured the essence of Manitoba’s plan in the headline for its analysis of the budget: “Aspiration without action.”
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