Manitoba's Fiscal Future

Earlier in spring, the provincial government tabled its 2026 Budget under the banner of "Good Jobs. Lower Costs. Better Health Care."

We’ve now had the chance to review it more carefully, and while there are some positive measures, the overall direction raises significant fiscal and policy concerns.

Manitoba is projecting $26.8 billion in revenue and $27.3 billion in spending for 2026/27, producing a $498 million deficit.

That’s a reduction from last year’s $794 million deficit, but the improvement relies on optimistic assumptions: strong revenue growth, controlled spending increases, and good performance from Manitoba Hydro.

And there are plenty of reasons to be skeptical.

In fact, the $794 million deficit from last year has already proven to be overly optimistic, with the actual deficit now expected to be $1.7 billion - more than double what last year's budget expected.

If this year's projection is off by a similar amount, we can expect this year's deficit to actually end more like $1.4 billion.

And a single bad year for Hydro, a slowdown in the economy, or changes to federal transfers could compound the problems.

About $727 million of the projected increase comes from federal transfers, and a large portion depends on Manitoba Hydro swinging from a $502 million loss to a $140 million profit.

The budget’s fiscal health is highly contingent on factors beyond provincial control.

Even worse, spending continues to rise across the board.

Health care now accounts for nearly 40% of the budget, with over 4,000 new permanent employees added to the payroll.

Education, justice, and social services are all growing, while debt servicing costs reach $2.38 billion.

The services that money is being spent on may or may not turn out to be worthwhile, but it's still money we don't have, that we're just adding to our debt to be paid back by even higher taxes in the future.

Speaking of which, Manitoba’s net debt is now projected to reach $39.7 billion, with a debt-to-GDP ratio of 38.2% - more than double Saskatchewan’s.

The budget also expands government intervention in the economy and labour markets.

Major capital projects over $50 million will require Manitoba Jobs Agreements dictating wages, benefits, and apprenticeship targets.

The government is exploring grocery sector regulations, including bans on algorithmic pricing, mandatory unit pricing, and freezing milk prices.

Targeted subsidies to favoured businesses (as opposed to general tax cuts) continue to be the government's preferred tool, with EV rebates, rental housing incentives, and new financing programs for businesses set to be administered by yet another government agency - the Economic Development Agency.

These measures risk picking winners and losers, distorting markets, and locking in ongoing spending obligations.

Manitoba’s strengths - low electricity costs, a diversified agricultural sector, and strategic northern infrastructure like Churchill - are real.

But this budget relies heavily on continued revenue growth, Hydro performance, and federal transfers.

That dependency limits flexibility, increases risk, and places a growing burden on future taxpayers.

The Manitoba Institute will continue to monitor government spending, compare projections to actuals, and advocate for policies that prioritize long-term fiscal responsibility, transparency, and economic freedom.

But we cannot do this work without your support.

If you believe Manitoba needs to prioritize fiscal discipline and transparency, please consider making a contribution today:

- The Manitoba Institute Team

We’ve now had the chance to review it more carefully, and while there are some positive measures, the overall direction raises significant fiscal and policy concerns.

Manitoba is projecting $26.8 billion in revenue and $27.3 billion in spending for 2026/27, producing a $498 million deficit.

That’s a reduction from last year’s $794 million deficit, but the improvement relies on optimistic assumptions: strong revenue growth, controlled spending increases, and good performance from Manitoba Hydro.

And there are plenty of reasons to be skeptical.

In fact, the $794 million deficit from last year has already proven to be overly optimistic, with the actual deficit now expected to be $1.7 billion - more than double what last year's budget expected.

If this year's projection is off by a similar amount, we can expect this year's deficit to actually end more like $1.4 billion.

And a single bad year for Hydro, a slowdown in the economy, or changes to federal transfers could compound the problems.

About $727 million of the projected increase comes from federal transfers, and a large portion depends on Manitoba Hydro swinging from a $502 million loss to a $140 million profit.

The budget’s fiscal health is highly contingent on factors beyond provincial control.

Even worse, spending continues to rise across the board.

Health care now accounts for nearly 40% of the budget, with over 4,000 new permanent employees added to the payroll.

Education, justice, and social services are all growing, while debt servicing costs reach $2.38 billion.

The services that money is being spent on may or may not turn out to be worthwhile, but it's still money we don't have, that we're just adding to our debt to be paid back by even higher taxes in the future.

Speaking of which, Manitoba’s net debt is now projected to reach $39.7 billion, with a debt-to-GDP ratio of 38.2% - more than double Saskatchewan’s.

The budget also expands government intervention in the economy and labour markets.

Major capital projects over $50 million will require Manitoba Jobs Agreements dictating wages, benefits, and apprenticeship targets.

The government is exploring grocery sector regulations, including bans on algorithmic pricing, mandatory unit pricing, and freezing milk prices.

Targeted subsidies to favoured businesses (as opposed to general tax cuts) continue to be the government's preferred tool, with EV rebates, rental housing incentives, and new financing programs for businesses set to be administered by yet another government agency - the Economic Development Agency.

These measures risk picking winners and losers, distorting markets, and locking in ongoing spending obligations.

Manitoba’s strengths - low electricity costs, a diversified agricultural sector, and strategic northern infrastructure like Churchill - are real.

But this budget relies heavily on continued revenue growth, Hydro performance, and federal transfers.

That dependency limits flexibility, increases risk, and places a growing burden on future taxpayers.

The Manitoba Institute will continue to monitor government spending, compare projections to actuals, and advocate for policies that prioritize long-term fiscal responsibility, transparency, and economic freedom.

But we cannot do this work without your support.

If you believe Manitoba needs to prioritize fiscal discipline and transparency, please consider making a contribution today:

- The Manitoba Institute Team