The province hopes to reduce core government spending this year by making cuts to the bureaucracy and raising funds from gas taxes and fee increases under the new budget as Manitoba faces a billion-dollar deficit.

"Spending is down 3.9 per cent off last year's actual spending, and we are driving efficiencies within the budget," said Premier Greg Selinger after the 2012 budget was tabled.

But critics said that under the budget, the government is spending more.

"This budget presents a façade of action, which papers over a worsening fiscal debt," said Manitoba Liberal Leader Jon Gerrard.

"Mr. Selinger promised six months ago, ‘I'm going to balance the budget without raising taxes.' He's broken that promise already – it's a betrayal," said Hugh McFadyen, Manitoba PC party leader.

The province expects to make up a nearly $1 billion deficit by 2014 with an array of cost-cutting measures that it says will decrease provincial spending by an estimated 3.9 per cent this year.

The province will also draw $196 million from its rainy day fund to help reduce the record deficit.

Manitoban drivers to pay more this summer

The cost of driving a vehicle in Manitoba will go up this summer.

The province plans to increase gas taxes by 2.5 cents per litre -- the first increase in Manitoba since gas taxes were frozen in 1993. Motorists can expect to pay more at the pump starting May 1.

The cost to register vehicles in the province is also going up. Rates will increase depending on the type of vehicle to a max of $35 per year starting July 1.

The province expects to raise about $45 million from the gas hike in this budget and about $16 million from the increase in vehicle registration costs.

Gas-tax hike draws mixed responses

Some officials spoke out about the gas-tax increase Tuesday.

"It's disappointing. What we needed to see in this budget was a focus on getting spending under control rather than asking taxpayers to put in more money," said Colin Craig of the Canadian Taxpayers Federation.

Others, however, hope the increase will lead to improved highways in the province.

"We were definitely hopeful there'd be a little more money dedicated to the roads. CAA has a campaign about the worst roads, but a 2.5 cent increase is a step in the right direction. But it's not more than a drop in the bucket in the grand scheme of things," said Liz Peters from CAA.

Winnipeg Mayor Sam Katz said he doesn't expect any of the revenue to be directed towards the city.

"Our understanding is that the increase in the gas tax will be going towards the province of Manitoba infrastructure. It won't have an impact on Winnipeg – that's what we've been told to date.

Putting funds towards flood costs

The money from increases to gas taxes and vehicle registrations will go to cover repairs for roads and more than 80 bridges damaged by the 2011 flood as well as to improve existing roads and highways, said Minister of Finance Stan Struthers. 

The province announced some of the money would be spent on flood mitigation. Brandon will see an influx of cash to help bring flood preparedness levels up to a one in 300 year level. Funding for flood protection along the Assiniboine River and around Lake Manitoba was also promised.

"Fuel taxes are the main way we pay for infrastructure in Manitoba," Struthers said.

The raises were necessary, Struthers added, to eliminate the deficit by 2014.

Haircuts and insurance to be taxed, user fees and tobacco taxes going up

While the province didn't announce any increases to personal, corporate or sales taxes in the budget, it did expand the number of items sales tax will apply to.

The retail sales tax will now apply to things like home insurance and haircuts.

The province announced starting in July Manitobans will pay a provincial sales tax on haircuts over $50 and all spa services. The province will also be looking for some extra cash from anyone planning body modification. Tattoos and piercings will now be subject to PST.

Property and liability insurance will also be taxed under the measures announced in the 2012 budget.

In addition, Sunday shopping hours will be extended, provincial officials announced Tuesday morning.

The cost of lighting up will also rise this year. Tobacco taxes are being increased by 2.5 cents per cigarette (about 50 cents for a 20 cigarette pack) in May. 

The province hopes to raise about $10 million from the move, which it said is to discourage tobacco use.

The province hopes to raise millions from increasing user fees on things like child-abuse registry checks and copies of birth or marriage certificates. CTV has compiled a full list of the expected revenue from these fee hikes here.

The province will also be selling off $75 million in assets but wouldn't say Tuesday exactly what it was planning on selling. "We have a number of government buildings that are at the end of their lifetime," Struthers said.

Bureaucracy streamlining expected to save province $128 million

The province plans to merge crown corporations, freeze wages of elected officials and cap corporate costs at the regional health authorities for an expected $128 million in savings for this budget year.

"The $128 million number is a very firm target that our government is going to be working towards, pretty much starting tomorrow," said Struthers said Tuesday.

Ten government departments will see freezes or reductions in their budgets, and the number of government appointed agencies, boards and commissions will be reduced by about 20 per cent, the province said.

Elected officials will also feel the squeeze. The province has also planned a 20 per cent rollback on salaries for government ministers and a wage freeze for MLAs.

The province also plans to merge the Manitoba Liquor Control Commission and the Manitoba Lotteries Corporation, hoping to cut administration and capital costs associated with the corporations.

RHAs to be merged, admin services reduced

The number of RHAs in the province will be reduced to less than half from 11 to five. The province plans to eliminate 30 to 35 executive positions at the RHA and cut the number of boards in half.

The funds saved will be redirected to hospitals, quick care centres and access centres, the province said.

"This will not be a layoff of frontline workers. We're not going to be using this to fire nurses… this is strictly about administrative costs," said Struthers.

The province plans to create new health regions by merging existing ones. There will be five regions after the changes take place: a western, northern, southern, eastern and Winnipeg-Churchill region will exist.

Affordable housing, minimum wage hike and increases in tax credits for families, seniors on way

Keeping with earlier promises, the province said it plans to make 1,500 new affordable and social housing units available over the next five years.

The province said it's on track to meet its target of having a doctor available to every Manitoban by 2015. Provincial officials also promised free and accessible cancer testing, treatment and pharmaceuticals to all Manitobans.

The province will be spending $4 million this year to reduce class sizes in kindergarten to Grade 3 classes. The aim is to have all classes below 20 students.

The province announced an additional $1.5 million for the Métis Economic Development Fund, which supports business development in Métis communities across the province.

The province also said it will move to reduce the cost of milk in the northern regions of the province but did not indicate by how much on Tuesday.

There were also some other breaks for Manitobans. The province said it will move forward with previous promises to modestly increase income tax credits. The personal exemption will increase by $250, while the seniors' maximum property tax credit will increase by $75 to $1025 total.

Minimum wage is also slated to go up by 25 cents to $10.25 in October.