REGINA, SK: The Canadian Taxpayers Federation (CTF) is calling on the City of Winnipeg and the Manitoba government to control spending and reduce debt in the wake of credit rating downgrades. Moody’s, an international bond rating agency, recently downgraded the credit ratings for both governments.

“The Manitoba government deserves a lot of the blame for the city’s downgrade as the bond market is losing confidence in the ability of the provincial government to be there for municipalities if they struggle,” said Todd MacKay, the CTF’s Prairie Director. “But the city has been spending its way deeply into debt, so it’s not without fault.”

Credit ratings from bond rating agencies are similar to personal credit scores. When a family misses car payments their credit score is likely to suffer and they will face higher interest payments when their mortgage is renegotiated. The same is true for governments.

Moody’s downgraded the Manitoba government’s credit rating because of soaring debt and the lack of a credible plan to balance the budget. This year the Manitoba government’s deficit is projected to add $422 million to the provincial debt of more than $33 billion. Interest payments will cost Manitoba $842 million this year.

Moody’s notes that the City of Winnipeg’s finances are reasonably strong, but municipalities depend on provincial governments. Therefore, when the province’s credit rating takes a hit it takes down the city as well.

However, the city’s finances are facing challenges as well. Since 2010, Winnipeg’s debt has soared by nearly 90 per cent from $496 million to $943 million. This is despite more funding from the federal and provincial governments as well as ever-increasing tax revenues.

“There’s no shortage of money at the legislature or at city hall,” said MacKay. “The problem is spending. Both governments are spending money faster than it comes in and they simply have to get spending under control.”