It’s become obvious the Yukon is going into debt, big time.
The Yukon Hospital Corporation is going to borrow $67 million. Yukon Energy is going to issue a $100-million bond. We can only guess what Yukon Housing and the Liquor Corporation have up their sleeves.
And the big daddy of them all, the Yukon government itself, plans to burn $29.3 million in cash this fiscal year.
You have three choices when your credit card bill exceeds your income: get a raise, spend less, or sell some stuff. (The fourth option – change your name and move to Costa Rica – doesn’t work for governments, so we’re ignoring it here.)
The government has so far avoided tax increases. They are highly unpopular. And it’s important for economically challenged regions like the Yukon to avoid the high tax levels that discourage economic activity in similarly isolated places like Newfoundland.
In any case, our tax base is small. Even if personal and corporate income tax revenue were raised 10 per cent, that would only net about $6 million per year. That’s nowhere near enough to finance the kind of vote-getting projects this government has conditioned us to expect.
As for cutting costs, this is theoretically a big opportunity. With gross operations and maintenance spending over $750 million this year, a five per cent cut here would generate almost $40 million. But cutting costs also requires political courage. In fact, the government is going to be challenged just to restrain the growth of government costs. The teachers’ union is driving hard for a raise of nine per cent over two years, according to media reports. The public schools personnel cost is about $67 million, so this alone would cost $6 million (and would filter into future pension costs too). Then come negotiations with the main government workers’ union.
Which brings us to asset sales.
Premier Dennis Fentie has backtracked, for now anyway, on selling bits of Yukon Energy. He undoubtedly learned a lot from the incident, not least of which is that he now knows that the remaining members of cabinet will support him no matter what he does.
Of course, the government won’t tell us what it might be thinking about selling. But one can imagine the premier smiling maliciously as he approves ministerial travel to very important conferences in Copenhagen and China, while he and the deputy ministers stay home and rummage through departmental attics for family silver to sell off.
What might they sell first?
The obvious one is Yukon Energy or its dams. But that file is now politically radioactive.
What else might there be in the over $450 million in “nonfinancial” assets the Yukon government has on its balance sheet?
Selling airports and highways has been popular elsewhere, but none of our facilities likely have enough traffic to make tolls worthwhile.
The Yukon government owns a lot of land, but most of it is in places that won’t command big prices. In fact, by the time new roads and facilities are built, one suspects it costs the government money to sell new land.
Next come big chunks of land downtown. But who would buy the ferro-concrete wonder at Whitehorse Elementary when the old Canadian Tire building remains vacant two blocks away?
This illustrates the point that potential buyers will pay most for sites they don’t have to clean up, such as old oil refineries and tank farms, or for sites where they don’t have to deal with aging, single-use buildings such as the YTG Main Building or the tourist information centre.
Parking lots are often candidates for redevelopment, since a lucrative building can be put on top with a parkade underneath. But the prime lot at 3rd and Steele is owned by the city, and it’s unclear if anyone would want to live in a condo in the YTG Main Building parking lot that had a view of the premier’s office.
As for the waterfront, the city and Kwanlin Dun own most of the Left Bank now. However, the Department of Education building is in a prime spot for condos. And since the Department of Education would help our schools as effectively as it does now if it were located on Herschel Island, there could be a proverbial “win-win” here.
Other bits of government land farther from Main Street, such as the Transportation and Liquor compounds in Marwell, are potential candidates. A profit might be eked out after cleanup, but the payoff likely wouldn’t be enormous. Other government real estate assets include schools, but most of the ones with rapidly shrinking populations are on the edge of town with minimal resale value.
In short, the land portfolio might generate a few million here and few million there. But not enough to satisfy the huge cash appetite of the Yukon government.
What else might there be?
Selling our garbage is another idea. Some landfills in Sweden are now being mined for old wood and metal, apparently, and our garbage could be burnt to generate power and lucrative greenhouse gas credits. But as with parking lots, again it is the city that owns the prime garbage location.
Overall, this is starting to look more like a garage sale than an aristocratic family pawning a couple of heirloom jewels.
But we shouldn’t underestimate the premier’s creativity. And any readers who want to help out are encouraged to go on Google Earth and look for government assets to sell.
Just make sure you copy the minister responsible on your idea, since the premier probably hasn’t.
Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels.