The Yukon government expects to post a $23-million deficit this fiscal year.
But don’t tell that to Dennis Fentie, the premier and Finance minister. He doesn’t want to hear it.
Fentie, who has often treated the word “deficit” as a dirty word, denied during question period yesterday that the territory was headed for the red.
“We’re not in deficit,” Fentie insisted, provoking jeers and laughter from the opposition benches.
A spending bill tabled by Fentie told another story. It reported the shortfall.
Increased demand for health care is the biggest reason for the additional spending, said David Hrycan, deputy minister of finance. The territory’s budget had called for a surplus of nearly $20 million.
Fentie’s answer confuses deficits with debt. A deficit is when the government spends more than it takes in. Debt is the result of accumulated deficits, when the government is forced to borrow money to payoff its obligations.
The territory isn’t in debt today. But its savings will continue to shrink this year, thanks to more deficit spending proposed by Fentie in the budget he released yesterday.
The Yukon has more than $200 million in the bank, Fentie bragged. But subtract liabilities – bills to be paid, wages, retirement benefits and so forth -Â and you’re left with $69.4 million.
That’s $23 million less than what was available one year ago, when the territory had net financial resources of $92 million.
By the end of 2010-11, the government expects to burn through another $29.2 million in savings, leaving $40.2 million.
And that’s counting Yukon’s investments in asset-backed commercial paper, currently valued at $24 million, which may not be easily converted into cash any time soon. Take that away and you’re only left with $16 million by this time next year.
Meanwhile, the territory will borrow $167 million to finance the expansion of the Mayo hydro-electric dam, a new medical residence for Whitehorse and new hospitals for Watson Lake and Dawson City. This borrowing doesn’t appear in the territory’s budget because the work has been foisted upon Crown corporations.
“The people of this territory will be paying for this government’s irresponsible, unsustainable spending for decades to come,” said the NDP’s Todd Hardy during question period. “This is the first time in my memory that a premier has allowed our territory to go into debt that makes up 16 per cent of a $1 billion budget.
“Why is the Finance minister jeopardizing the future of Yukoners by running up a debt and running down the surplus?”
Fentie countered that the opposition “would allow Yukoners to pay more with diesel costs to produce the same electricity we will be producing in a green, environmentally friendly and more affordable manner” and “have Yukoners travelling to all points in the country to receive health services we will be providing right here on the ground.”
Besides, future generations should pay their share of the cost of hospitals and hydro-electric projects, said Fentie. “Why should the taxpayers of today pay for facilities and assets that will be used by Yukoners long into the future?” he asked.
Liberal Leader Arthur Mitchell put it differently. “No government, of any political stripe, including the Yukon Party, has mortgaged the future in such an irresponsible way. The interest on this debt would continue to be paid for decades to come, long after this premier has retired.”
Mitchell called the government’s budget a “reckless” way to prepare for the next territorial election, which must be held by autumn of 2011.
“The plan is to spend as much money as possible and worry about the consequences another day. It’s a reckless go-for-broke approach that will cost Yukoners dearly.”
The NDP’s Steve Cardiff wondered what future cuts to services will be required to bring the territory’s finances in order. “Will public servants pay through cuts to their wages, benefits, pension plans or even their jobs? Will communities pay through cuts to programs and services? Will the public pay through the sell-off of infrastructure? What’s going to be the cost to the environment?
“Will the premier tell us which programs will be cut? Which assets will be sold and which promises will be broken when the future catches up with his unsustainable, irresponsible spending and borrowing habits?”
“Well, the short answer is: none, none, none, none and none,” said Fentie. “No such thing would be taking place, unless by some quirky and unrealistic outcome of a general election sometime in the future the members opposite somehow got into office.”
The 2010-11 budget calls for the territory to spend a record $1.075 billion. This is largely thanks to ever-increasing transfers from Ottawa, which are expected to grow to $690 million. There are no tax hikes in store.
Much of the budget had been spilled by Fentie on Monday, when he gave the Yukon and Whitehorse chambers of commerce a preview.
Big-ticket items include $33.9 million from Ottawa to clean up Faro mine, $28 million for work on the new Whitehorse jail, $16.8 million for Dawson City’s new sewage treatment plant and $15 million to repair roads, bridges and airports.
There’s also more than $19 million earmarked for affordable housing. That includes work to complete the 30-unit complex for single families in Riverdale, and other projects to replace worn-out social housing in Carmacks, Dawson City, Ross River and Whitehorse.
Another $16 million will go to building seniors’ homes. That includes $11.5 million to replace the Alexander Street home in Whitehorse. Other seniors projects are planned or underway in Faro, Teslin and Watson Lake.
And $10.3 million will help build the Kwanlin Dun’s cultural centre, which will house the new Whitehorse public library.
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