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The Balanced Budget, Fiscal Management and Taxpayer Accountability Act

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If you need an official copy, contact Statutory Publications.

S.M. 2008, c. 44

Bill 38, 2nd Session, 39th Legislature

The Balanced Budget, Fiscal Management and Taxpayer Accountability Act

(Assented to October 9, 2008)

WHEREAS the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants sets standards for applying generally accepted accounting principles to Canadian public sector organizations, including provincial governments;

AND WHEREAS, consistent with those standards, which are designed to improve the accountability and transparency of public sector bodies, the government's budget and financial statements are prepared on a summary basis for the government reporting entity;

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

PART 1

BALANCED BUDGET AND FINANCIAL MANAGEMENT STRATEGY

Definitions

1           The following definitions apply in this Part.

"balance" means the balance determined under section 3 as at the end of a fiscal year. (« solde »)

"fiscal year" means the period beginning on April 1 of one year and ending on March 31 of the following year. (« exercice »)

"government reporting entity" has the same meaning as in The Financial Administration Act. (« entité comptable du gouvernement »)

"minister" means

(a) the Minister of Finance, except in section 6; and

(b) in section 6, any member of the Executive Council. (« ministre »)

BALANCED BUDGET

Annual budget for government reporting entity

2(1)        For each fiscal year, the minister must table in the Legislative Assembly a budget for the government reporting entity that projects a positive balance as at the end of that year.

Time to present budget

2(2)        The budget for a fiscal year is to be tabled by April 30 of that year except where

(a) it is not practicable to do so because of unusual circumstances; or

(b) the Legislature is dissolved at any time in that month or the immediately preceding month.

Balance at end of fiscal year

3(1)        For the purposes of this Act, the balance as at the end of a fiscal year is the average of the net results for the fiscal years within the four-year period ending at that time. The net result for each of those years is the net income or loss as shown in the audited summary financial statements for the government reporting entity for that fiscal year, subject to any adjustments to be made for that fiscal year under subsection (2) or (3).

Proceeds from sale of Crown corporation not included in determining balance

3(2)        Revenue or other financial assets received by the government as a result of selling shares or assets in the course of a privatization of Manitoba Hydro, The Manitoba Public Insurance Corporation, The Liquor Control Commission or The Manitoba Lotteries Corporation must not be included in determining whether there is a positive or negative balance for a fiscal year.

Other adjustments in determining balance

3(3)        For the purpose of subsection (1), the net income or loss for a fiscal year may be adjusted by excluding a revenue shortfall or increase in expenses for the fiscal year that occurred because of

(a) an unanticipated natural or other disaster that affects the province or a region of the province in a manner that is of urgent public concern;

(b) Canada being at war or under the apprehension of war;

(c) unusual weather or climate conditions the fiscal impact of which was not anticipated in the budget; or

(d) a decision of another level of government or of a regulatory body that took effect after the budget for the fiscal year was tabled in the Legislative Assembly or within 30 days before it was tabled, the fiscal impact of which was not anticipated in the budget.

Declaration of L.G. in C.

3(4)        Before the balance as at the end of a fiscal year is determined, the Lieutenant Governor in Council may declare that a revenue shortfall or increase in expenses occurred in that fiscal year as described in subsection (3).  The declaration must include a description of the shortfall or increase, including the amount of it and the cause of it.

Effect of declaration

3(5)        For the purposes of this Act, a declaration under subsection (4) is conclusive evidence of the facts stated in the declaration.

Annual statement of balance

4(1)        For each fiscal year, the comptroller under The Financial Administration Act must prepare a statement, to be included in the public accounts under section 65 of that Act, that shows

(a) the balance as at the end of the fiscal year; and

(b) any adjustments made under subsection 3(2) or (3) in determining that balance.

Auditor General's report

4(2)        The statement is to be accompanied by a report of the Auditor General concerning his or her examination of the statement.

Third-quarter report of projected balance

5           For each fiscal year, beginning with the 2008-09 fiscal year, the government's third-quarter financial report must include a statement of the projected balance as at the end of the fiscal year.

Consequence of negative balance

6(1)        If the balance as at the end of a fiscal year is negative, for the next fiscal year the salary of each minister — including any person appointed as minister in that next year — must be reduced in accordance with subsection (2).

Salary reduction

6(2)        When a minister's salary is to be reduced for a fiscal year,

(a) it is to be reduced by the following percentage of the additional salary otherwise payable for that fiscal year to him or her under The Legislative Assembly Act for his or her services as a minister:

(i) 40%, if salaries were reduced under this section for the immediately preceding fiscal year, or

(ii) 20%, in any other case;

(b) the reduction may be spread out equally over the remaining pay periods in the fiscal year; and

(c) the reduction applies only while he or she is a minister.

Application after change in government

6(3)        If the party forming the government after a general election is not the party that formed the government before the election, the salary reduction does not apply to a minister appointed after the election in respect of a negative balance as at the end of

(a) the fiscal year in which the election occurred; or

(b) the immediately preceding fiscal year.

Consequence of projected negative balance

7(1)        If the statement under section 5 (third-quarter report) for a fiscal year projects a negative balance for the end of the year, the salary reduction under section 6 is to commence at the beginning of the immediately following fiscal year as if the balance will be negative as projected.

If negative balance not realized

7(2)        If salaries are reduced because a negative balance was projected for the end of a fiscal year and the actual balance as at the end of the year is not negative, the salary reductions must be reversed and paid to the persons entitled to those salaries.

FINANCIAL MANAGEMENT STRATEGY

Financial management strategy

8(1)        For each fiscal year, the minister must prepare a statement of the government's financial management strategy.  The statement is to include

(a) a description of the government's objectives for measurable outcomes for the end of the fiscal year and for the future; and

(b) a summary of the core government expenditures and projected revenue for the fiscal year, consistent with the main estimates of expenditure and revenue tabled or to be tabled in the Legislative Assembly under The Financial Administration Act.

Strategy document to be tabled in Assembly

8(2)        The minister must table the statement referred to in subsection (1) in the Legislative Assembly at the time of tabling the budget under section 2.

Report on outcomes

9(1)        After the end of each fiscal year, the minister must prepare a report that compares the results for the year to

(a) the objectives for the year set out in the financial management strategy document that was tabled under section 8 for that year; and

(b) the summary of core government expenditures and projected revenue that was tabled under section 8 for that year.

Report to be tabled in Assembly

9(2)        The minister must table the report referred to in subsection (1) for a fiscal year in the Legislative Assembly at the time of tabling the public accounts for that year.

PART 2

TAX REFERENDUM REQUIREMENT

Referendum required for tax changes

10(1)       Subject to subsection (2), the government shall not present to the Legislative Assembly a bill to increase the rate of any tax imposed by an Act or part of an Act listed below, unless the government first puts the question of the advisability of proceeding with such a bill to the voters of Manitoba in a referendum, and a majority of the persons who vote in the referendum authorize the government to proceed with the changes:

(a) The Health and Post Secondary Education Tax Levy Act;

(b) The Income Tax Act;

(c) The Retail Sales Tax Act.

Revenue neutral and external changes

10(2)       Subsection (1) does not apply to

(a) a bill to increase the rate of a tax if, in the opinion of the minister, the increase results from changes in federal taxation laws and is necessary to maintain provincial revenue or to give effect to a restructuring of taxation authority between the federal government and provincial governments; or

(b) a bill to increase the rate of a tax if, in the opinion of the minister, the proposed change is designed to restructure the tax burden and does not result in an increase in revenue.

Referendum procedures

11(1)       A referendum under section 10 must be conducted and managed by the Chief Electoral Officer in the same manner, to the extent possible, as a general election under The Elections Act, and the provisions of The Elections Act apply with necessary modifications to a referendum.

Question to be put to voters

11(2)       The question to be put to voters in a referendum under section 10 must be determined by an order of the Lieutenant Governor in Council at the commencement of the referendum process.

Regulations re procedures

11(3)       The Lieutenant Governor in Council may make any regulations that the Lieutenant Governor in Council considers necessary respecting the referendum process to give effect to section 10 including, without limiting the generality of the foregoing,

(a) governing the preparation of a voters list;

(b) governing the expenses, if any, that may be incurred, and the contributions, if any, that may be made, and by whom, in connection with a referendum;

(c) where greater certainty is required, modifying to the extent necessary the provisions of The Elections Act to make them applicable to the requirements of a referendum.

Costs of referendum

11(4)       The costs of conducting a referendum are to be paid from the Consolidated Fund without any legislative authority other than this subsection.

PART 3

DEBT REPAYMENT

Definitions

12          The following definitions apply in this Part.

"allocation committee" means the committee continued under section 15. (« Comité de répartition »)

"debt retirement account" means the account established under section 13. (« compte de remboursement de la dette »)

"fiscal year" means the period beginning on April 1 of one year and ending on March 31 of the following year. (« exercice »)

"general purpose debt" means general purpose debt as described in subsection 78(2) of The Financial Administration Act, but does not include

(a) debt associated with the acquisition of capital assets by the government for which an amortization allowance has been included in core government expenditures; or

(b) other debt incurred by the government for which a repayment provision has been included in core government expenditures. (« dette générale »)

"minister" means the Minister of Finance. (« ministre »)

Debt retirement account

13(1)       The Debt Retirement Fund established under The Balanced Budget, Debt Repayment and Taxpayer Accountability Act is continued as an account within the Consolidated Fund and is to be known as the "debt retirement account".

Annual transfers to debt retirement account

13(2)       The minister must transfer the following amounts to the debt retirement account in each fiscal year until the minister is satisfied that the balance in the account is sufficient to retire the general purpose debt and eliminate the government's pension liability:

(a) an amount equal to the greater of the following amounts:

(i) $110,495,180 plus 7% of all debt repayments made under section 14,

(ii) 1% of the total of

(A) the general purpose debt as at the end of the immediately preceding fiscal year, less the balance at that time in any related sinking funds, and

(B) the government's pension liability as at the end of the immediately preceding fiscal year, less the balance at that time in the pension assets fund under The Financial Administration Act;

(b) an amount equal to the earnings of the Consolidated Fund in that year on the amount standing to the credit of the account in that year;

(c) the amount, if any, that the minister considers necessary to ensure that the balance in the account will be sufficient to match the projected pension contributions of new employees hired on or after April 1, 2000, after

(i) including the amounts to be transferred for the year under clauses (a) and (b), and

(ii) deducting the amount allocated for that year to general purpose debt.

Additional amounts may be transferred

13(3)       The minister may from time to time transfer additional amounts to the debt retirement account with the approval of the Lieutenant Governor in Council.

Payments from debt retirement account

14(1)       With the approval of the Lieutenant Governor in Council, the minister may use all or any part of the balance in the debt retirement account to repay general purpose debt or reduce the government's pension liability, subject to the allocations made under section 15.

Required payments every 5 years

14(2)       At least once every five years after March 31, 2006, at a time to be determined by the Lieutenant Governor in Council, the minister must use the balance in the debt retirement account to repay general purpose debt and reduce the government's pension liability, according to the allocations made under section 15.

Allocation made under former Act

14(3)       For the purposes of this section, an allocation made by the Debt Retirement Fund Allocation Committee under section 8 of The Balanced Budget, Debt Repayment and Taxpayer Accountability Act is deemed to have been made under section 15 of this Act.

Debt Retirement Account Allocation Committee

15(1)       The Debt Retirement Fund Allocation Committee established by The Balanced Budget, Debt Repayment and Taxpayer Accountability Act is continued as the "Debt Retirement Account Allocation Committee", consisting of

(a) the Deputy Minister of Finance, who shall be the chairperson of the committee; and

(b) at least four other individuals appointed by the Lieutenant Governor in Council who, in the opinion of the Lieutenant Governor in Council, demonstrate financial expertise and competence, each of whom may be appointed for any term the Lieutenant Governor in Council considers appropriate.

Duties of allocation committee

15(2)       The allocation committee must determine the allocation between general purpose debt and pension liability of all amounts credited to the debt retirement account.

Effective reduction of aggregate amount

15(3)       In determining the allocation, the allocation committee must follow investment and debt reduction principles that, subject to subsection (4), in the opinion of the committee, will result in the most effective reduction of the aggregate amount owing.

Requirement regarding matching contributions for new employees

15(4)       The allocation committee must ensure that provision exists for matching the projected pension contributions of new employees hired on or after April 1, 2000.

PART 4

AMENDMENT OR REPEAL

Restriction on amendment or repeal

16(1)       Any bill introduced in the Legislative Assembly to amend, repeal, override or suspend the operation of this Act must be referred at the committee stage to a standing committee of the Legislative Assembly which provides the opportunity for representations by members of the public.

Requirements re hearings

16(2)        The standing committee reviewing a bill described in this section must not be scheduled until seven days after the later of

(a) the day the bill is distributed in the Legislative Assembly; and

(b) the day the public is given notice of the date, time and place of the committee meeting.

PART 5

AMENDMENTS, REPEALS, C.C.S.M. REFERENCE AND COMING INTO FORCE

C.C.S.M. c. F55 amended

17(1)       This section amends The Financial Administration Act.

17(2)       The following is added after section 26:

Fiscal stabilization account

26.1(1)     The fiscal stabilization fund established under The Fiscal Stabilization Fund Act is continued as an account within the Consolidated Fund and is to be known as the "fiscal stabilization account".

Target level

26.1(2)     The Minister of Finance shall make every effort to ensure that the balance in the fiscal stabilization account as at the end of each fiscal year is at least 5% of the core government expenditures for that year.

Annual transfer to account

26.1(3)     After the end of each fiscal year, the Minister of Finance may, with the approval of the Lieutenant Governor in Council, transfer to the fiscal stabilization account from core government operations an amount determined by the Minister.

Use of account

26.1(4)     The Minister of Finance may, with the approval of the Lieutenant Governor in Council, apply all or any part of the balance in the fiscal stabilization account to support core government operations in a fiscal year or to repay debt.

17(3)       Subsection 65(1) is amended by striking out "and" at the end of clause (a) and replacing everything after clause (a) with the following:

(b) the statement required under section 4 of The Balanced Budget, Fiscal Management and Taxpayer Accountability Act (statement of balance);

(c) for each of the following accounts, a statement that summarizes the transfers in and out of the account for the fiscal year and shows its balance as at the end of the fiscal year, accompanied by a report of the Auditor General concerning his or her examination of the statement:

(i) the debt retirement account under The Balanced Budget, Fiscal Management and Taxpayer Accountability Act,

(ii) the fiscal stabilization account under section 26.1; and

(d) information required under this Act or by the Minister of Finance to be reported in the public accounts.

C.C.S.M. c. B5 repealed

18          The Balanced Budget, Debt Repayment and Taxpayer Accountability Act, S.M. 1995, c. 7, is repealed and, for greater certainty, does not apply to the fiscal year ending on March 31, 2009.

C.C.S.M. c. F85 repealed

19          The Fiscal Stabilization Fund Act, S.M. 1989-90, c. 16, is repealed.

Transitional

20(1)       For the purpose of determining the balance as at the end of the 2008-09 fiscal year and at the end of the next two fiscal years, the reference to the net income or loss for a fiscal year before the 2008-09 fiscal year shall be read as a reference to the net income or loss for the government reporting entity for the fiscal year in question as shown in the public accounts for that year.

20(2)       An individual who was a member of The Debt Retirement Fund Allocation Committee under The Balanced Budget, Debt Repayment and Taxpayer Accountability Act immediately before this Act received royal assent continues as a member of the Debt Retirement Account Allocation Committee.

C.C.S.M. reference

21          This Act may be referred to as chapter B5 of the Continuing Consolidation of the Statutes of Manitoba.

Coming into force

22          This Act comes into force on the day it receives royal assent.