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Another big budget, with a big hole

The most noteworthy thing about Yukon's budget for the coming year may not be what's in it. It's what's missing. As expected, the territory will run up its third consecutive deficit for 2010-11, to a tune of $20.2 million.

The most noteworthy thing about Yukon’s budget for the coming year may not be what’s in it. It’s what’s missing.

As expected, the territory will run up its third consecutive deficit for 2010-11, to a tune of $20.2 million.

Also as expected, Premier Dennis Fentie released another $1-billion budget for the coming year, packed with goodies to please voters before the next election, to be called by this autumn.

But there’s no money identified for a new homeless shelter for Whitehorse. Nor is there any money for a new medical detox facility.

The Yukon Party government endorsed the idea of building a homeless shelter in late 2010, but it refused to offer any specifics until it received a report prepared by Dr. Bruce Beaton and James Allen, chief of the Champagne and Aishihik First Nations on how to help homeless alcoholics.

The report, released in January, proposes a new shelter for Whitehorse, with an attached medical detox facility.

The territory responded by announcing plans to build a better drunk tank attached to the new Whitehorse Correctional Centre, for $4 million. Beaton called the move a “good first step,” but no substitute for a new shelter and detox.

Stuart Whitley, deputy minister of Health, told reporters in January that plans to build a sobering centre would be unveiled “in the next couple of months.”

Beaton remained upbeat. He believed there was political will to make his plans a reality.

It appears he was wrong.

Health Minister Glenn Hart acknowledged during question period yesterday that the new drunk tank, which will be staffed by nurses and correctional staff, is “not ideal” to help get homeless alcoholics back on their feet, but it would “meet the requirements” of Beaton’s report.

Not true, said Beaton. “I’m disappointed,” he said. “If it ends there, they’ve stumbled.”

Fentie used his budget speech to underline the accomplishments of his government. He boasted how, since his reign began in 2002, the territory’s budget has nearly doubled to almost $1.1 billion from $550 million.

Once again, this year’s budget is the biggest ever.

It projects a surplus for the coming year of $38.5 million. Opposition leaders find this hard to swallow. After all, Fentie promised surpluses for the past two years. He delivered deficits.

“It’s completely unrealistic,” said Liberal Leader Arthur Mitchell. “Why should we trust this government, and these numbers?”

New Democrat Leader Liz Hanson warned in a release that “the next government will be left with a depleted savings account, a large and growing debt and an economy that is overly dependent on a single sector with a history of going from boom to bust.”

Over the past year, the territory spent $15 million in savings, leaving $18.2 million in the piggybank. That’s down from $33.4 million one year ago, and $165 million in 2008.

The biggest cost overruns occurred at the Department of Health and Social Services. It spent $17.7 million more than budgeted, largely on social assistance and physician and hospital claims.

The Department of Environment went over budget by more than $5 million. That’s largely thanks to new costs to clean up the old Klondike Highway camp and the Marwell tar pit in Whitehorse.

Fentie defended his deficit-spending ways as necessary during the economic downturn. “What is the point of having a savings account if you can’t use it in a time of need?” he asked.

But Fentie insists this year will be different. Financial documents project the replenishment of Yukon’s savings as the government racks up surpluses over the next four years. This is expected to happen largely thanks to a tsunami of federal cash, which will wash up an additional $50 million in revenues this year.

Fentie claims he can balance the books without raising taxes or cutting government services. And he’ll also maintain Yukoners’ energy rebate for another year, at a cost of $3 million.

The budget forecasts, improbably, that the cost of government services will decline this year by $10 million, when they’ve consistently grown each year in recent memory.

Health spending has consistently overshot the territory’s budget in previous years, requiring the government to top-up the department’s coffers in mid-year. Fentie insists, this time, the forecast will be closer to the mark: the department’s budget has swollen by 14 per cent, to $262.6 million.

Fentie’s budget speech may as well have been an election speech, in many respects, as he rattled off figures to show how much Yukon has grown with him at the helm.

Yukon’s grown from being one of the weakest economies in Canada to one of the strongest. Its population has grown by 4,500 people. Unemployment has moved from double digits to 4.4 per cent in December.

We’re in the midst of a major mining boom, with development and exploration costs hitting $410 million in 2010. And Yukon is one of two jurisdictions with a savings account - the other is Alberta.

In Whitehorse, the territory will spend $31.5 million developing Whistle Bend, the capital’s next big, new subdivision. That work can’t come soon enough, as the city’s in the midst of an acute housing shortage.

Another $4.8 million will go to develop the waterfront and $1.5 million towards building the new Kwanlin Dun Cultural Centre.

Work on the new Whitehorse Correctional Centre should wrap up this year, for $7.4 million. Planning a new FH Collins high school will continue, for $2.7 million.

Another $3.3 million will go toward completing renovations at the Thomson Centre, where 19 extended care beds will open this year. And $2.6 million will help build the new Abbeyfield seniors’ complex in Whitehorse and new social housing units for Dawson City.

Spending on roadwork will decline to $47.8 million, from $58 million.

Yukon’s budget doesn’t capture the full scope of the government’s infrastructure splurge, since many of the projects are being managed by Crown corporations. Yukon Energy is expanding Mayo’s hydroelectric dam, and the Yukon Hospital Corporation is building new hospitals in Watson Lake and Dawson City.

This work pushes $162.2 million in debt off the government’s books, by the NDP’s reckoning.

But this spending comes at a cost: it must be repaid, with interest, over the next three decades.

Contact John Thompson at