On Tuesday, March 24, Manitoba Finance Minister Adrian Sala tabled his, and his government’s, third budget. The document continues with the major themes this government was elected on: rebuilding health care, reducing costs for everyday Manitobans while growing the economy, and bringing the province’s finances back into balance before the next election.
Economic and fiscal situation
Budget 2026 updates the 2025-2026 forecast to come in at a $1.67 billion deficit, up from $794 million projected at this time last year. Increased expenditures for emergency management, health care and education, as well as significant revenue decline of $751 million at Manitoba Hydro, are largely responsible for the adjustment. Going forward, the province is projecting a deficit of $498 million in 2026-2027, with surpluses of $8 and $13 million over the next two fiscal years.
With this budget, Manitoba now has the lowest projected deficit in Canada, among provinces that have tabled budgets for 2026-2027. Moreover, as a share of GDP, Manitoba’s deficit sits at 0.5 per cent, lower than all other provinces, which range from 0.7 to 2.9 per cent. Debt servicing costs have also been reduced from 9.9 cents on the dollar when the government was elected to 8.9 per cent this year, which is projected to save $404 million by 2028-2029.
Economic growth was better than expected in 2025, with GDP up 1.6 per cent, but following the trend among provinces, is expected to grow slightly less this year, at 1.3 per cent. Unemployment is expected to remain relatively stable in 2026 and 2027, from 5.7 per cent in 2025 and 5.8 per cent this year to 5.6 per cent in 2027. Recent increases in the cost of consumer goods is expected to moderate, decelerating from CPI increase of 2.7 per cent in 2025 to 2.4 per cent in 2026.
Despite positive projections, economic risks remain. Highest among those is the upcoming review of the Canada-United States-Mexico Agreement, which could further exacerbate current challenges for trade-dependent agriculture and manufacturing sectors and undermine business confidence and investment across the board. Additional risks include Canada-China trade relations, especially related to agriculture exports, and geopolitical tensions related to ongoing wars in the Middle East and eastern Europe, and U.S. intervention in Venezuela. Following on the heels of the largest wildfire in Manitoba’s history last year, climate change and environmental events remain a threat to economic output and could require unbudgeted expenditures.
Good jobs
The Finance Minister highlighted the government's focus on the Port of Churchill in his budget speech, and again on Wednesday morning when presenting to the Manitoba Chamber of Commerce. Seen as an opportunity to position the province as a desirable export hub, port development is a centrepiece of the government's economic development strategy. In addition to $263 million in previously announced federal and provincial funding for the port and rail owner, Arctic Gateway Group, Budget 2026 establishes a new $10 million Churchill Catalyst Fund, which aims to attract private sector investment.
Budget 2026 outlines Manitoba’s largest ever capital budget at $3.8 billion this year with an annual spend of $4.3 billion each year over the next five years. Of the $21.6 billion in infrastructure investment planned for the next five years, the largest portion, $9.5 billion, is attributable to crown agencies, including significant work to renew and secure Manitoba Hydro’s electricity supply in the coming years. The remaining expenditures will focus on highways, new schools and child care centres, new personal care homes, health care and research facilities and a new correctional institute in Dauphin.
Additional investments in economic development and job growth include:
- Establishment of a new Economic Development Agency
- $50 million in Trade Growth Investment Financing
- $7.2 million to train more apprentices
- $144 million in business risk management programming for farmers and producers
- A further $60 million investment in the Prairie Innovation Centre (PIC) for Sustainable Agriculture
- $2.5 million for adult literacy
- Above inflation investment of $80 million in K-12 education
Lower costs
Manitoba’s recent moves to permanently reduce the gas tax, expand the education property tax credit and address the cost of groceries are expanded in this budget with the announcement that PST would be removed from all groceries in the grocery store, effective July 1. The move is the latest attempt to reduce the price of food, first by eliminating property controls on grocery stores, then freezing the price of milk and introducing legislation to prevent differential price increases based on use of personal data.
Additional affordability measures include:
- Increasing the Homeowners Affordability Tax Credit to $1,700 for 2027*
- Increasing the Renters Affordability Tax Credit, with an increased seniors top up
- Providing free child care for low-income families
- Extending the EV rebate
- Making transit free for kids and youth
- Freezing crown land leases for the third year in a row
- Continuing the small business security rebate program
*The expansion of the Homeowners Affordability Tax Credit is being offset by a phasing out of the credit for those with homes valued above $1 million, with a complete phase out at $1.5 million valuation.
Better health care
Following on primary care investments that have seen the hiring of 4,054 net new healthcare staff since 2023, the government is turning its attention more directly to reducing ER waits. New cardiac and mental health zones are being created adjacent to ERs so patients can be diverted to the right type and level of care quickly, and 32 new alternative levels of care beds are being added to Siloam Mission.
Additional health care investments include:
- $22 million to re-establish the Cardiac Centre of Excellence at the St. Boniface Hospital – now “Heart Care Manitoba”
- 200 more hip and knee surgeries at the Selkirk hospital and more MRIs
- Increased funding to expand Northern Dialysis Services and deliver on the Diabetes Action Plan
- Expanded physician recruitment and increased residency spots
- $5.2 million for the new Manitoba Menopause Clinic
Upstream’s analysis
Despite ongoing economic challenges arising from matters outside Manitoba’s borders, the government remains on the path to balance it committed to during the 2023 election. Infrastructure investment, additional apprenticeship training, and new measures to attract private investment are projected to grow Manitoba’s economy in future years and achieve the government's goal of becoming a have-province.
Budget 2026 invests in rebuilding the health care system to help more people get the care they need, when and where they need it. It reduces costs by eliminating PST on groceries, making transit free for kids and youth, and expanding rental and property supports. And it makes much needed investments in K-12, adult education and apprenticeships to ensure the province has the knowledge and skills it needs for economic growth in the long-term.
In his third budget, Minister Sala has made a number of concrete moves that will deliver tangible results for Manitobans, exactly what every finance minister aims to do with less than two years to go before the next scheduled election in 2027.
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