Premier Brian Pallister's hold-out position on health funding from Ottawa appears to be threatening federal funding earmarked for a high-tech project promised more than two years ago.

A letter obtained by CBC News, written by a senior Manitoba civil servant and addressed to the federal finance minister's chief of staff, indicates Ottawa is making a link between Pallister's refusal to sign a deal on the federal health transfer and $60 million in funding for the Factory of the Future project.

Premier Brian Pallister's hold-out position on health funding from Ottawa appears to be threatening federal funding earmarked for a high-tech project promised more than two years ago. 1:53

Michael Richards, Manitoba's deputy minister of Intergovernmental Affairs, wrote the letter on Tuesday, expressing concern about what Pallister has described as "linkages" between Manitoba's stance on a health funding deal and other projects.

"These linkages — as I immediately and firmly relayed when you first raised them last Friday — are completely unacceptable to my government. That you were nonetheless instructed to re-assert them yesterday is more than unfortunate," Richards wrote to Richard Maksymetz, the chief of staff to finance minister Bill Morneau.

The Factory of the Future facility is being spearheaded by the National Research Council and would work closely with the private sector on the digitization of industrial processes. The previous federal Conservative government made the initial commitment to the project. The Liberal government maintained funding for the project in its first budget.

NRC says funding for projects still in place

A spokesperson for the National Research Council confirmed Tuesday the funding remained in place in three portions: $5 million in London, Ont., to retrofit the current lab space; $5 million in Montreal to improve operating efficiencies in machining, automation and robotics; and $60 million for a facility in Winnipeg to enable future collaborations and technology platforms for advanced manufacturing.

Intergovernmental Affairs deputy minister Michael Richards says the link between high-tech funding and health care 'introduces unnecessary friction and discord' between Ottawa and Manitoba. (CBC News ) Pallister raised concerns about funding for the Factory of the Future late last year, saying the projects were well along in the other two locations.

The rhetoric between Pallister and the federal Liberals has grown increasingly sharp as Manitoba remains the lone province without a national funding agreement on health care.

Pallister also refused to sign on to a national climate change plan last year as a gesture of defiance to get a first ministers meeting on health funding.

The letter from Richards to Ottawa also refers to Manitoba's holdout status on the climate change agreement as a "linkage," to getting a deal on health funding.

In the letter, Richards calls the federal stance "irreconcilable with any notion of collaborative federalism," and decries the connection between the Factory of the Future funding and the health transfer deal.

"The vulnerable health care needs and priorities of the people of Manitoba are not leverage points to advance other federal policy aims," Richards wrote.

Manitoba has asked Ottawa for increases in funding for Indigenous health programs and to fight chronic kidney disease, as well as cash similar to what the other provinces have received for mental health and home care. There is also a call for separate funding to help the province combat a growing opioid crisis.

Won't respond to 'threats,' Pallister says

Pallister's growing frustration with Ottawa was obvious as he spoke to reporters at the legislature following question period Wednesday.

"Yes, a threat was made to renege on a previous commitment, and we think that's unfortunate," Pallister said.

Premier Brian Pallister's relationship with Ottawa has grown increasingly tense. (CBCv News) As he spoke, the premier grew more direct in his criticism of how the federal government is managing negotiations on health funding, specifically around the Factory of the Future project.

"The withdrawal of previous commitments is not something that emboldens character or smacks of integrity ... threatening to break your word is not something that is helpful in a negotiation if you wish to build trust, confidence. And as I say, Manitoba is a small province, but we have the right to be respected and we have the right to be heard," Pallister said.

The premier says the federal government needs to withdraw the threat, calling it "totally inappropriate." He says he's confident Manitoba will receive the same general increases in health-care funding the rest of the provinces are getting, as well as cash for mental health and home care.

The side deals on extra funding remain to be worked out.

Feds fire back

The federal government fired back in a response from Finance Minister Bill Morneau's office. The feds accuse Pallister of linking health-care funding to his refusal to sign a national climate change deal and say there has been an attempt to resolve several issues at the same time.

"It's important to remember that it was the government of Manitoba that linked these issues in the first place, citing health care when they refused to sign the Pan-Canadian Framework on Climate," a spokesperson for Morneau said.

Pallister described a lack of progress for the Factory of the Future until recently as "inaction," but called the latest salvo from Ottawa a "threat" from which the federal government must back away.

CBC News has asked the National Research Council for an update on the status of the Factory of the Future project, but so far has only been provided with a statement outlining the original promises made on the funding to the three locations.