04/14/2013 05:00 EDT | Updated 06/14/2013 05:12 EDT

Taxes may rise as part of Manitoba budget on Tuesday

WINNIPEG - Manitoba taxpayers may have to dig deeper into their pockets after Tuesday's provincial budget.

Finance Minister Stan Struthers hinted at possible tax increases in a recent interview, as he said the NDP government must find money to pay for rising costs that include new flood-fighting measures.

"That's a question for Tuesday's budget, and we're going to be upfront and forthright with Manitobans in terms of how we pay for these big bills that we face — very necessary bills, very necessary projects, but we have to pay for them," Struthers said.

The government is in the midst of a string of deficits that it hopes to end by the 2016-17 fiscal year. It has pointed to the disastrous flood of 2011 as a major cause. The cost of fighting and recovering from the flood has topped $1.2 billion, although much of that will be recouped from the federal government under national disaster-aid and agricultural programs.

But spending has also climbed steadily in many areas including justice and family services. Cost overruns have already pushed the projected deficit for the current fiscal year to $567 million from $460 million. Struthers has consistently said he will not make major cuts to front-line services.

Struthers is now facing more calls for flood-fighting dollars. An independent review of the 2011 flood released earlier this month called for, among other things, a new reservoir or diversion channel along the Assiniboine River and a second outlet on Lake Manitoba to reduce water levels when necessary. The total price tag could top $1 billion over multiple years.

"Our biggest challenge right now is paying for things like the flood-proofing infrastructure," Struthers said.

As well, the province feels required to spend new money on job-training programs announced in the recent federal budget that require provincial funding, he added.

Struthers is coming off a budget last year that raised the ire of many by raising taxes on gasoline, tobacco, tattoos and many types of insurance. User fees were also hiked for a variety of government services such as vehicle registrations and birth certificates. The increases occurred less than a year after the NDP said it would not raise taxes in the 2011 election campaign.

The about-face has given the Opposition Progressive Conservatives plenty of fodder.

"The NDP's ... high-spending problem has become a problem for Manitobans because it translates to a high tax problem for people in their homes," Tory Leader Brian Pallister said.

"They have just failed to get their spending problem addressed."

The government has moved to cut some costs. It found $115 million in savings last year by delaying construction projects, reducing advertising campaigns and taking other measures. It also sold off the provincial property registry to a private firm for $75 million.

But overall spending continues to climb. Expenditures in the current fiscal year are estimated to be about 20 per cent higher than five years ago. A report from the Royal Bank of Canada earlier this month said Manitoba spends more per-capita on government programs than most other provinces, at $10,805 per resident.