Premier and Finance Minister Sandy Silver says the Yukon is looking at an $8-million deficit for this fiscal year, despite the former Yukon Party government’s forecast of a $9.5-million surplus last spring.
Silver is blaming the Yukon Party for the deficit, saying the former government spent extra money that wasn’t included in the spring budget. He said the Liberals didn’t know the details of the Yukon’s financial situation before taking office.
“We did understand, as everybody else did, that there was a surplus,” he told the News. “But since getting full access to the accounts, we now know that there is in fact a deficit, and that deficit is $8 million.”
Silver said the extra spending includes money to cover the Yukon Employees’ Union’s new collective agreement, election costs — including severance payments to outgoing MLAs — expenses from the recent royal visit and the hiring of new teachers and educational assistants “that were not discussed in the budget and not planned for in the budgetary process or in the legislative assembly.”
He said the government is now working to “find areas of efficiencies, to try to decrease the budget as much as possible.” He didn’t say where he might make cuts.
The premier also wouldn’t say whether he plans to run more deficits in the coming years. During the election campaign, the Liberals said they had “no plan” to run a deficit, but also refused to rule out going into the red.
Silver has said he would consider borrowing money to be sure the Yukon doesn’t leave federal infrastructure funding on the table, since the Yukon must spend one dollar of its own for every three infrastructure dollars from Ottawa.
This week, Silver announced he had issued a special warrant for up to $29.4 million in spending that wasn’t included in the spring budget, which he says is all Yukon Party spending.
By far the largest chunk of that money — $12 million — went to the Department of Education. Silver said that was used for hiring new teachers and educational assistants.
Yukon Party MLA Brad Cathers struck back at Silver this week, suggesting the Liberals have created the deficit themselves.
“It appears to be a choice by Premier Silver and his cabinet to authorize new spending and attempt to paint the picture of it just being spending that they’ve inherited from the previous government,” he said.
Cathers said there was some extra spending under the Yukon Party before the election, but when the reins were handed over to the Liberals, “they were on track to have an annual surplus.”
At this point, it’s difficult to say who spent what when, because the Liberals have yet to table a supplementary budget that would give details about the additional spending. The special warrant allows the government to authorize the extra spending before it’s been debated in the legislature.
Cathers accused the Liberals of issuing the special warrant to avoid debate, so that they could blame the Yukon Party for the deficit.
“There’s no sound reason why the premier couldn’t have tabled this spending in the legislative assembly 12 days ago (when it convened for a day) and answered questions on the floor of the house about the nature of the spending increases, including when those increases to spending were authorized.”
Silver has said he hasn’t issued a supplementary budget because it would force him to defend the Yukon Party’s spending decisions.
Speaking to the News, he flatly rejected the idea that some of the extra money was Liberal spending.
“Have you seen any big announcements from us?” he said. “We’re keeping the lights on right now, and we’re preparing for our budget in the spring.”
Cathers also said the Liberals “have inherited what is by far the rosiest financial situation that any new government has ever seen upon taking office.”
When the Yukon Party took power in 2002, for instance, Pat Duncan’s Liberal government had just run a $21-million deficit. The Yukon Party hasn’t run a deficit since 2011.
But the Yukon Party has also spent down the territory’s cash in the bank, from $223 million in 2015 to a projected $57 million at the end of this fiscal year, partly to pay for large capital projects. As a result, it was always going to be harder for the new government to avoid a deficit or spending cuts, regardless of its political stripe.
During the election campaign, none of the three major parties — including the Yukon Party — would commit to balancing the books. The Yukon Party government’s last spring budget projected a $20-million surplus in the coming fiscal year, to be achieved largely by cutting capital spending.
Silver has yet to announce a date for the spring legislative session.
Contact Maura Forrest at maura.forrest@yukon-news.com