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The Globe and Mail

Manitoba premier says flooding will raise deficit

Bryan Ezako boats to his home near St. Francis Xavier, Man., May 9, 2011.


The cost of this year's unprecedented spring flooding could eventually top $1-billion and will push Manitoba's deficit significantly higher, Premier Greg Selinger says.

But he said on Thursday he's still committed to balancing the books by 2014 – a key promise from the fall provincial election campaign.

Flood costs so far have reached more than $800-million, and that figure is still going up as compensation claims continue to pour in, he said. It doesn't include $100-million spent to dig an emergency channel to lower the level of Lake Manitoba, nor does it include repairs for damaged roads and bridges.

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Although Ottawa will cover some of Manitoba's flood costs, the numbers are still putting a squeeze on the province, Mr. Selinger said. He wouldn't say how much the deficit is projected to be.

"Nobody should be surprised that it will be larger, given the extent of the flood this year – significantly larger," he said after his annual state-of-the-province address to the Winnipeg Chamber of Commerce. "It is a massive challenge that we had to meet this year and we have made significant investments in meeting that."

Mr. Selinger said the province's financial picture will be clearer once the government releases its quarterly fiscal update – expected within the week.

Hundreds of people still haven't been able to return home since the prolonged spring flooding.

For weeks this spring and into the summer, the province struggled to contain the swollen Assiniboine River by operating the Portage Diversion – a channel that funnels water from the river into Lake Manitoba – well over its design capacity.

That pushed water levels up on the two lakes, which cut off roads and caused considerable damage when spring storms whipped up waves that slammed into homes and cottages. The province offered compensation and still hasn't finalized all the claims.

Ottawa is mandated to cover some of Manitoba's flood costs, but Mr. Selinger said more than $343-million will come from provincial coffers. This year's situation would have been a lot worse if the province hadn't invested in flood protection for years, he added.

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Mr. Selinger is still planning to balance the books in 2014. Critics have called that target unrealistic, but the premier said it can still be done with careful, limited investment.

"Budgets will be tight and we will have to manage very carefully. We do have a priority investing in the economy, as well as education, but it will be very tight budgets."

He declined to speculate on whether there may be cuts.

Conservative Leader Hugh McFadyen said the NDP isn't being straight with taxpayers. He said Mr. Selinger won't be able to balance the books by 2014 unless he hikes taxes significantly, fudges the books or makes cuts.

"They've been increasing spending an average of six per cent a year over the last number of years and they're only projecting revenue to grow in the range of about two per cent," Mr. McFadyen said. "When you add the flood costs … there is just no way they can do it without significant tax increases or unbelievably creative accounting."

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