The City of Winnipeg has to dig out of a $6.3-million hole this year because Manitoba is no longer honouring funding agreements for Winnipeg Transit, Winnipeg's police cadets and the Winnipeg police helicopter.

On provincial budget day in April, the Progressive Conservative government announced Winnipeg would receive the same funding it received in 2016, with no incremental increases to cover the cost of inflation.

The Tories clarified that statement in May when the government proposed legislation that would allow the province to wriggle out of a long-standing agreement to cover half the cost of Winnipeg Transit and fund municipal infrastructure with a share of provincial sales tax revenue.

The city has now started to quantify the cost of the provincial moves. A first-quarter financial status report, published by the city on Friday, said Winnipeg is out $5.1 million because the province froze Winnipeg Transit funding this year at the 2016 level instead of increasing the funding to cover half the inflation for 2017.

The report also notes the end of provincial agreements to cover the inflationary increases in Winnipeg's police helicopter and police cadet programs will cost the city $1.2 million.

Council finance chair Scott Gillingham (St. James-Brooklands-Weston) said the city prepared its 2017 budget under the assumption the province would honour its funding agreements.

"We've discovered now with the provincial budget, that the anticipated funding from the province ... is not coming through. The province's funding is based on 2016 actuals," Gillingham said.

The $6.3-million funding shortfall arrives on top of a $9.5-million shortfall created when the city banked on transferring surplus funds from the 2016 budget over to this year. That surplus did not materialize due to the cost of cleaning up after heavy December snowfalls.

The city is now on pace for a $13.6-million year-end deficit, according to the first-quarter financial status report.

To ward off the red ink, the city plans to cancel or put off $4.3 million in capital projects, draw $400,000 from the insect control reserve and siphon $160,000 from the land operating reserve, according to a separate report to council's finance committee.

The city may also consider putting off a transfer to the fiscal stabilization reserve if the budget deficit can not be prevented, the report states.