Although Premier Wab Kinew’s promise of cheaper rotisserie chicken may be amusing, there are more consequential aspects of Manitoba’s new budget that may compel fiscal policy nerds to cry foul.
The NDP government’s plan to remove provincial sales tax from a wider array of groceries this summer will cost the province $32 million annually, according to the budget.
Whether or not you agree with the rationale, this PST cut will deprive the province of nowhere near as much revenue as previous populist moves by this NDP government.
That includes the 2024 gas tax holiday, which cost the province $340 million, or the roughly $72-million decision to convince Manitoba Hydro not to seek a rate hike in 2025.
Rather, Manitoba’s 2026-27 budget includes far more hazardous elements, all of which can be fairly characterized as optimistic assumptions about revenue and risk.
Here are five of the most significant aspects of the budget that warrant concern.
1. Betting Manitobans make more money
One of the most ambitious aspects of Manitoba’s spending plan for the next 12 months is a projection of ending the coming fiscal year with a $498-million deficit.
This would represent a significant improvement on both the $794-million deficit the NDP government hoped to see at the end of the 2025-26 fiscal year and the nearly $1.7-billion deficit we’re going to end up with.
One of the ways the province intends to whittle down the deficit is through an increase in both personal and corporate income tax revenue. The budget for the coming year calls for income tax revenue to rise to $6.3 billion, an increase of $300 million over this year.
Analysts at major banks and economists view this as optimistic.
“Seeing this gain may prove challenging against a highly uncertain backdrop — particularly as the government itself is forecasting subdued economic growth,” TD economist Rishi Sondhi wrote Tuesday in a Manitoba budget analysis on the bank’s website.
“Indeed, parts of the business sector were already under strain last year, with exports to the U.S. falling sharply.”
In other words, the NDP government is banking on you and your employers doing better financially in a war-affected, tariff-impaired economy.
2. Betting Manitobans spend more, too
The NDP government is not just banking on you making more. It’s hoping you spend enough money this year to drive provincial sales tax revenue up $100 million to $3 billion in 2026-27.
This is a tall order when inflation outpaces salary growth. It is entirely likely Manitobans will cut back further on discretionary spending in order to ensure they can cover basic needs like housing, groceries and education.
The province also cannot rely on population growth to fuel more PST revenue while existing Manitobans struggle to pay their bills. Manitoba had no population growth at all last year.
The provincial population actually dropped by 527 people in 2025, according to Statistics Canada, to remain a hair above 1.5 million.
The prospects of renewed population growth this year are dampened by continuing federal restrictions on temporary workers.
3. Assuming Manitoba Hydro avoids another drought
The 2026-27 budget relies on a $140-million revenue transfer from Manitoba Hydro. This would constitute a major turnaround from 2025-26, when Hydro is expecting a $464-million deficit because of drought.
While Hydro’s fortunes may improve this coming fiscal year, there is no reason to expect they will improve that much.
The Lake Winnipeg drainage basin just went through another relatively dry fall and winter, according to the March flood outlook prepared by Manitoba’s hydrologic forecast centre.
More significantly, water levels on Manitoba Hydro’s largest reservoir, Lake Winnipeg, remain significantly below normal. Right now, the lake sits almost four feet below the top of Hydro’s recommended operating range, which is lower than that it has been on this date during 90 per cent of years recorded since the Crown corporation began regulating the lake.
4. Banking on fewer forest fires this summer
A big factor in Manitoba’s massive deficit this fiscal year was a terrible forest fire season in 2025.
Manitoba Finance Minister Adrien Sala doesn’t believe a repeat is coming this summer.
“Last year we experienced an historic wildfire season, so that was an anomaly and we don’t expect to see historic wildfire seasons repeat themselves, so we don’t believe that to be a recurring event,” Sala said on budget day.
Another significant wildfire season is unfortunately a possibility. The hydrologic forecast centre is expecting a warmer-than-average spring to follow the slightly dry winter.
The 2026-27 budget also does not include a large increase in operating funds to fight wildfires or mitigate disasters.
While the wildfire service budget is up $3 million to $43 million, the wildfire suppression budget is unchanged from last year at $14 million, and the money set aside for emergency expenditures also remains $50 million.
As well, the internal adjustments and contingencies budget, which includes some money that can be spent on responding to disasters, is down $9 million to $141 million.
The new budget does set aside $100 million to hire new firefighters, build a Thompson-area fire base and buy new water bombers, but some of these commitments will take years to fulfil.
5. Relying on Ottawa to pay the bills
During the 2026-27 fiscal year, Manitoba plans to spend $27.3 billion. More than a third of this money is coming from the federal government.
Federal transfers to Manitoba this coming year will rise by $700 million to $9.7 billion, according to the budget. This marks yet another year of increased support from Ottawa, based on Manitoba’s status as an economic underperformer.
University of Winnipeg economist Philippe Cyrenne said Tuesday this increasing federal support allows Manitoba to be less disciplined about managing expenditures than are most other provinces.
“This government doesn’t seem to be as concerned [about controlling spending], and that doesn’t necessarily mean job cuts. It means looking for efficiencies,” Cyrenne said.
“Governments should always be doing that, because you can’t always depend on these extraordinary revenues coming in.”
If Ottawa ever decides to amend the federal transfer formula, Manitoba will be forced to make sudden and sweeping cuts — all while serving interest payments on net debt that’s now approaching $40 billion.
