The Manitoba government is set to offer relief to some homeowners hit by rising property taxes in its budget Tuesday, while asking people with million-dollar homes to pay more.

The budget is to increase the province’s Homeowners Affordability Tax Credit, a savings applied against education property taxes, to $1,700 a year from $1,600, starting in 2027, a government source said Monday. The source spoke on condition of anonymity, as they were not authorized to speak publicly.

While many homeowners would benefit, the credit is to be reduced on a sliding scale for homes assessed at more than $1 million. Those with homes assessed at more than $1.5 million would no longer receive any credit, the source said.

The net effect of both changes would see homeowners overall save $7.2 million a year, the source added.

The move may address some criticism the NDP government has faced over school taxes that have risen sharply. Manitoba funds schools from direct provincial funding and an education property tax levied by school divisions. In some divisions in Winnipeg, the tax has risen by more than 20 per cent over four years.

The government did away with a 50 per cent rebate on education property taxes introduced by the former Progressive Conservative government and substituted the fixed-dollar-amount credit.

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Unlike the rebate, the credit hasn’t been available to cottage owners, landlords and others.

The changes also meant owners of many lower-value homes saved money while many middle- and higher-value homes have been paying more. Revenue generated by the education property tax has jumped to more than $1.1 billion this fiscal year from $764 million the previous year.

The latest monthly inflation numbers from Statistics Canada say overall property taxes, including both school and municipal levies, were up 19.5 per cent in Manitoba in February compared to the same month last year. The increase was more than double the rate of any other province.

The budget comes as the government has promised to balance the books by the 2027-28 fiscal year after a string of deficits.

The province has missed its targets so far. The deficit for the current fiscal year is forecast to end at $1.6 billion, up from $794 million predicted last spring, due largely to drought and wildfires.

The government has hinted at or explicitly stated other steps it plans to take in this year’s budget, including more money for police officers, nurses’ training and cardiac care at St. Boniface Hospital.

The budget is to help fund a 2.9 per cent wage increase for early childhood education workers and 2,000 new child-care spaces, Finance Minister Adrien Sala said last week.

The budget is also expected to designate money for a public inquiry into a failed attempt by members of the former Tory government to get a silica sand mine approved east of Winnipeg.

The province’s ethics commissioner ruled three cabinet ministers broke the conflict of interest law by trying to get an environmental licence for the project after losing the 2023 election and before the NDP government could be sworn in.

Premier Wab Kinew has said there are unanswered questions about what happened.

His NDP government has made affordability one of its central themes, and it launched a study last month aimed at finding ways to keep grocery prices from rising quickly.

Kinew has hinted the government may set price limits on more types of containers of milk. The province currently caps prices only on one-litre cartons.

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