numbers suggest a fall election

Question: Why would a politician suggest a budget was shrinking when it was actually growing? Answer: Because they are trying to hide a growing debt. This is where the Yukon finds itself in fiscal year 2010.

Numbers suggest a fall election

Question: Why would a politician suggest a budget was shrinking when it was actually growing?

Answer: Because they are trying to hide a growing debt.

This is where the Yukon finds itself in fiscal year 2010.

You might think hiding a debt would be tricky, but you’d be wrong. Yukon budgets aren’t as straightforward as they used to be.

Once, the main estimates provided a fairly straightforward picture of the Yukon’s finances.

It expected a transfer of X cash from Ottawa. It had X money on hand. It expected to spend X running the government, and the rest, or most of it, was used for capital spending. Simple.

Today, the budget is murkier than it was. The government’s available assets are inflated by the projected value of schools, dams, bridges and even the legislative assembly itself.

And then there’s the off-books stuff. The Fentie government has started “encouraging” arm’s-length entities, like the Hospital Corp., to take on debt. None of that stuff appears on the government’s ledger, further obscuring the government’s real financial position – after all, the hospital debt is the government’s debt, just not in an accountant’s eyes. As we said, murky.

What is clear is the government is spending like mad – and incurring significant debt –

to keep tradespeople busy this summer and wallets momentarily fat.

Rural hospitals, social housing projects, medical dorms, dams, power lines, road and airport construction, a new jail, a new school, a new ambulance base … the list is immense – if you’ve got work to do around the house, it’s going to be bloody expensive to hire a carpenter or a plumber this year.

And that’s kind of the point – keep everyone busy.

Why?

Because this is the last budget Yukoners are likely to see before the next election.

Premier Dennis Fentie must call an election before October 14, 2011.

He’s not likely to wait that long.

There’s sound reasons for believing this.

Few governments like to wait until the last minute to call an election. Such a decision surrenders control. Your opponents know your back’s against a wall.

However, a year before, you can still plan for the date and leave your opponents guessing. You have an advantage.

And you can spend like mad beforehand to assuage any lingering anger at previous scandals.

Few new ones are likely to surface. Last summer’s ATCO and Peel debacles were unusual; summer is usually a slow news period.

After a summer of record construction spending – like this one – an incumbent politician could trumpet their economic stewardship before the first debt payments come due.

Civil servants just negotiated a pay raise. And, after a sleepy summer spent camping and fishing, they’ll be relaxed and relatively content.

And, with mining exploration booming, there’s little reason to wait before dropping the writ.

Waiting would also give Willard Phelps’ new political party more time to organize and build a profile.

Besides, Fentie strongly believes in fall election campaigns.

He’s going to call it sometime before the important mining sector leaves for the winter – so sometime before November.

Which is probably why the government financial statements are so screwy.

Nobody wants to run on their economic record when it is built on mountains of debt.

So, he’s massaged the numbers to ensure the territory has a surplus. At least it has a surplus today, before any cost overruns or other supplementary expenditures drive things into the red.

Which is why a department like Health shows an “estimated” $18-million reduction in spending – to $230 million from $248 million – while officials, aware people don’t want health programs cut, say Ottawa will pony up more cash. Don’t worry, they say, Yukon will spend more on health than last year. It just doesn’t show on the ledger yet.

So, on paper, a smaller budget. In reality, spending will increase, thanks to some still-to-be-identified federal grants. Net effect on the deficit: zero.

Do you buy it? And do you care?

A fall election depends on the answers to those questions.