The Yukon government needs an extra $1 million to cover the costs of the territorial energy rebate program.
Monday, Premier Dennis Fentie asked Yukon commissioner Geraldine Van Bibber to authorize a special warrant for $1,080,000 to cover an estimated 7,000, $150 cheques distributed to lower-income Yukoners to help offset rising energy costs.
The money for the rebate cheques wasn’t in the 2005-06 budget, but the Yukon politicians unanimously agreed to fund them last fall.
So far, the Finance department has processed about 1,500 applications, said deputy minister Bruce McLennan.
“We’ve started processing them and the cheques have started to go out, so we had to have a special warrant to pay them,” McLennan said Thursday.
“Since we don’t know exactly when the legislature is going to sit, although I speculate it will be some time at the end of March or early April, we needed the authority in the current budget year to make those payments.”
Otherwise, the government is on target to meet its $817 million budget, said McLennan.
“There are no cuts in the budget,” he said.
“All our obligations and liabilities are fully booked.”
But Peter Jenkins tells a different story.
On Wednesday, the former deputy premier told CHON-FM news that the Yukon government is going broke.
“There’s currently an under-budgeted amount in the pension plan that I’m given to understand approaches about $40 million that the government is going to have to meet,” said Jenkins, who was expelled from government caucus in November.
“There’s also the residence for the athletes that has not been budgeted for — that is probably between $30 million and $40 million at this juncture,” he said.
“The government has had to scrounge around for the money and pull back in all of the other areas, probably with the exception of Watson Lake, and hasn’t really come through.”
Totally incorrect, said McLennan.
“That’s completely false,” he said.
“The athlete’s village money has already been appropriated and identified in the budgets.”
The supplementary budget that the legislative assembly authorized in the fall includes more than $23 million for “specialty games.”
Jenkins’ statements about pension funds were also “absolutely untrue,” said McLennan.
There are two employee liabilities that the government needs to cover: $45 million for post-employment benefits and about $33 million for retirement benefits, he said.
“Those are both booked on the balance sheet as liabilities. They are fully recognized and fully accrued, in terms of our financial position.
“If we didn’t have those booked, we’d have $77 million in additional accumulated surplus, but because we’ve already booked that liability it reduces our accumulated surplus.
“Our books are on the up-and-up. Everything is fully recorded on the balance sheet.”
Fentie and McLennan have distributed a note to all departments telling them not to spend money unnecessarily.
That is standard procedure, said McLennan.
“Traditionally, government departments have a tendency, if they think they are going to lapse money, to go out and spend it.
“We send out a note urging people to be prudent.”
Under the Fentie administration, the Yukon switched from partial-accrual accounting to full-accrual accounting in 2004-05, which means all liabilities, from pensions to contracts, are accounted for.
“We recognize liabilities when they arise as opposed to when payment becomes due,” said McLennan.
“Full accrual gives the reader an accurate picture of the government’s financial situation because all our assets and all our liabilities are recognized.”
The switch to full-accrual accounting did result in some additional expenses, but they have been accounted for, according to government sources.
The Public Service Commission requested an additional $6,884,000 in November to cover employee future benefits.
“These costs are amounts that were not known prior to the close of the financial records at March 31, 2005,” minister Elaine Taylor said last fall.
Employee leave and termination benefits, post-retirement and post-employment benefits and employee buy-backs into the Yukon’s “super-annuation” pension plan with the federal government resulted in the additional cost, said Taylor.
“Employees have the right to buy back past service with the Yukon government or other employers transferable within the plan,” she said.
“Many employees have exercised this option and made lump-sum payments in order to do so.
“The employer — the Yukon government, in this case — must then match these payments at the rates determined by the plan.
“As I understand it, the rate is usually about 2.4 times the employee’s portion.
“The cost to the Yukon government is significant, but it is required under the plan and provides our government employees with access to one of the best pension plans in the country.”
Yukon College and the Yukon Hospital Corporation are in the hole over employee pension benefits.
But those are their obligations, not the governments’, said McLennan.
“They’ve got their own pension plan, which isn’t part of our pension plan,” he said.
Fentie offered the government’s assistance, but the college and hospital corporations have yet to reply, said McLennan.
“We have not got any final information from them. We don’t actually know what their obligations or liabilities are at this stage.
“When they come forward we’ll be looking at it and see if they need any kind of assistance.
“That’s the type of thing that would go to management board.”
When federal auditor general Sheila Fraser visited the Yukon two weeks ago she praised the Yukon’s accounting practices.
“Those were actually accolades to us because not all jurisdictions book all their liabilities,” said McLennan.
“We’re one jurisdiction that recognizes all our liabilities.”