A rebounding economy and higher federal transfer payments helped cut Manitoba's deficit by more than half, government fiscal numbers released Thursday show.

The deficit for the fiscal year that ended in March came in at $704 million, down from $1.6 billion originally predicted in the budget and from $2.1 billion the previous year. The numbers were contained in Public Accounts, the annual final tally of budget numbers reviewed by the auditor general.

One major factor was economic growth of more than nine per cent as COVID-19 restrictions were lifted and businesses reopened. That drove up income tax revenues from individuals and businesses.

"Retail sales last year soared 13.3 per cent," Finance Minister Cameron Friesen said.

Federal transfer payments were up as well, including a special one-time $145-million transfer to address surgical backlogs and other health issues.

On the downside, last year's drought saw production in several crops drop sharply. It also turned an expected profit at Crown-owned Manitoba Hydro into a $248-million loss as lower water levels reduced export sales of electricity.

Manitoba has been running deficits since 2009, with the exception of a $5-million surplus the year before the pandemic started.

The governing Progressive Conservatives have promised to balance the budget by 2028. Friesen said the Tories are focused on fulfilling that goal, but said the province is not out of the woods yet.

"There are a number of factors that are increasing risk — the ongoing war in Ukraine, supply chain constraints that have been persistent, volatile markets," he said.

Another set of figures released Thursday suggested the government could make more headway toward a balanced budget in the current fiscal year.

The first-quarter fiscal update estimates the deficit this year will be $202 million — less than half the $548 million predicted in the budget in April. The projection is partly based on wet weather, which has allowed Manitoba Hydro to export more electricity and forecast a surplus.

Friesen cautioned, however, that the projection is subject to change. Recent interest rate hikes have already prompted warnings from some economists that growth will slow, he said.

Even with a lower deficit, the province's overall debt is forecast to grow this year to $29.5 billion.

The Opposition New Democrats said the lower-than-expected deficit should prompt the government to put more money into health care. Emergency room wait times ballooned this summer and the demand for intensive care beds has remained above pre-pandemic levels.

"What I heard today is that there are resources available to help with the health-care crisis unfolding in emergency rooms and at hospitals across Manitoba," NDP Leader Wab Kinew said.

"Every day we're hearing stories about the struggle in our ERs, struggles in our hospitals."

The fiscal report also disclosed the salaries of public servants who make more than $75,000 a year. 

Public health officials who helped guide the province's pandemic response were near the high end of the list. 

Chief Public Health Officer Dr. Brent Roussin received $634,000 in total compensation in the last fiscal year, up from $428,000 the previous year. Dr. Joss Reimer, one of the leads on the COVID-19 vaccine team, earned $406,000, up from $396,000.

This report by The Canadian Press was first published Sept. 29, 2022.