04/30/2015 04:00 EDT | Updated 08/10/2015 06:59 EDT

Smokers, banks, rainy-day fund bankrolling Manitoba infrastructure spending

WINNIPEG - Smokers and banks will pay more to help finance Manitoba's infrastructure spending in a deficit budget that comes close to draining its rainy-day fund.

The governing NDP tabled a $15-billion budget Thursday that boosts tobacco taxes by $1 on a carton of cigarettes that costs $128.

It also increases the capital tax on financial institutions to six per cent from five per cent.

The budget — which includes a $422-million deficit — also increases tax credits for caregivers of vulnerable relatives at home and boosts rental assistance for welfare recipients by up to $271 a household.

"We made a decision to invest in infrastructure. We made a decision to invest in health care. We made a decision to invest in education," Finance Minister Greg Dewar said Thursday. "Other provinces have taken a different route."

The budget draws $105 million from Manitoba's rainy-day fund to pay down debt and support infrastructure spending. That leaves $115 million in a bank account that boasted $864 million in 2009.

That will be replenished at some point "as the economy grows," said Dewar, a longtime backbencher who took over the portfolio last fall after a partial caucus revolt against Premier Greg Selinger.

The fiscal blueprint promises $1 billion in infrastructure spending as part of a five-year stimulus plan that was announced when the government raised the provincial sales tax in 2013. The budget also includes modest spending increases in health care and education.

It records the latest in a string of deficits as the province delays balancing the books until 2019 — four years later than originally promised.

Dewar disagreed with Statistics Canada's assessment that Manitoba's economy grew by 1.1 per cent last year. He suggested the province is "on track to have the strongest economy in Canada."

But that's not enough to balance the books in the near future, he said.

"We're starting to see good numbers now and we're anticipating that we shall return to surplus as long as we continue to spend less than we have coming in."

That did little to quell critics who said the NDP has given up even the pretence of trying to rein in spending. Progressive Conservative Leader Brian Pallister said the government could have balanced the books this year if it had "just held the line on spending."

"They are making promises with money they are taking from our children and grandchildren here," the Opposition leader said. "It took 109 years for us as a province to get about $18 billion into debt. It's taken six for the premier and the NDP to double that debt. Somebody's got to pay that back."

Todd MacKay, prairie director of the Canadian Taxpayers Federation, said the "overwhelmingly irresponsible budget" shows the New Democrats have a spending problem.

"They promised to have this budget balanced. Instead, the deficit is going up," he said. "Future generations are going to pay for this budget. It's completely irresponsible."

The infrastructure spending wasn't enough to win over others. Winnipeg Mayor Brian Bowman said it will do little to help the province's largest city.

"We need new money. The model is ... fundamentally broken in terms of how we fund our cities," he said. "We have an obligation to fix it."

The NDP tries to leave behind internal turmoil that led to a leadership race in March which Selinger won by 33 votes. The premier's top five cabinet ministers resigned last year after calling for him to step down in light of plummeting opinion polls following the provincial sales tax increase.

"The government has obviously been preoccupied with something else over the past eight months and has not been focused on governing," said Chuck Davidson, president of the Manitoba Chamber of Commerce.

"This was a great opportunity to at least get us on a path ... to getting our economic house in order. They missed the mark."