Lackluster budget directionless, says opposition

Climate change is one of the four pillars of the Yukon government’s budget focus, said Finance Minister Dennis Fentie.

Climate change is one of the four pillars of the Yukon government’s budget focus, said Finance Minister Dennis Fentie.

He’s spending $130,000 on a climate-change action plan and doling out another $200,000 over the next five years to study how rural communities will adapt to change.

This year, Environment officials will also spend $227,000 on office furniture and equipment.

Quality of life, the environment and climate change, supporting the private-sector economy and good governance with strong fiscal management is the focus, said Fentie during Thursday’s budget address.

“At least we know they’ll be really, really comfortable when they finally make a plan,” said Liberal Leader Arthur Mitchell, responding to the budget by noting Fentie’s Environment department will spend more on furniture than on its pillar, a climate-change plan.

Also, the Yukon government is spending more money than it’s taking in.

But there’s enough money banked to keep the territory running a small surplus, said officials.

The government predicts a $341,000 surplus in the 2008-09 fiscal year, according to budget documents tabled by Fentie.

The $900-million budget is a $38-million increase from the previous year.

Government spending priorities are focused on four pillars, said Fentie in his budget address.

The government forecasts a $8.6-million surplus for 2007-08, down from the previous year’s actual surplus of $57.4 million.

Though the surplus is smaller, the territory is in good fiscal health because of its financial assets, said Finance officials, referring to a sort of government savings account.

Next year, the government will have about $108 million in financial assets, which include investments and cash.

That’s down about 17 per cent from the estimate of $130 million this year.

Finance officials say government finances are healthier than they’ve ever been.

The government isn’t borrowing money and is actually earning interest rather than paying off interest on debts, like most territories and provinces.

The Canada transfer grant is increasing four per cent to $564 million.

Toss in other grants for Health and Social Services and infrastructure, and federal funding tops $683.6 million.

That has opposition parties worried.

Larger federal transfers and a shrinking revenue base means the territory is more reliant on Ottawa than ever before, said Mitchell.

“We’re absolutely entitled to what we get from Canada, but what if Canada has to tighten its belt? What will Yukon do if we make no moves towards our own self-reliance?”

Reliance on Ottawa is increasing at an alarming rate, said New Democrat Leader Todd Hardy.

 As a percentage of main estimates, tax revenue has decreased while Ottawa transfers increased.

In 2008, taxes account for 8.9 per cent of revenue while transfers account for 72.3 per cent.

In 2005, those numbers were 8.2 per cent and 70.8 per cent.

In 2002, the year the Yukon Party took office, the numbers stood at 10.2 per cent and 69.5 per cent.

“Fentie has not been able to stimulate the economy no matter how much money feds have given him,” said Hardy.

“We have been going backwards under Fentie. This is not a diversified economy. It has big exploration money pumped into here, but our tax revenue has shrunk from 10 years ago.”

New territorial child-tax credits mean the government will collect about $2 million less in personal income tax.

But a substantial tobacco tax increase and the expiration of the mining-exploration tax credit will bolster territorial coffers by about $5 million.

The territory is taking its taxes on cigarettes and loose tobacco to some of the highest in Canada from the lowest.

On July 1, a pack of cigarettes will cost $1.95 more while taxes on loose tobacco will increase from 4.68 cents per gram to 21 cents.

Studies have shown that increasing the cost of smoking is one way to deter people from smoking, said Fentie.

The Yukon is the only jurisdiction where smoking rates have increased, he added.

The NDP applauds the tax hike, which signals the government will probably support its anti-smoking legislation coming forward this spring, said Hardy.

The government estimates it will collect $77.9 million in taxes in 2008/09, up from $69.2 million in 2006/07.

Capital spending will drop $17 million to $202.7 from $219 million this fiscal year.

The cost of running the Yukon government will rise to $697 million from $649.4 million this year.

The government’s decision to release the budget right before Easter demonstrates its lack of confidence in the document, said Mitchell.

“The most interesting thing about this budget is its beautiful cover photograph,” he said.

Funding to public schools branch is flat — $81.2 million to $81.6 million — despite constant requests from schools officials for more funding, he said.

Mitchell was looking for a writedown of investments in asset-backed commercial paper, but the government continues to count the $36.5 million as a financial asset.

The new nursing program at the college and the continuing of the Hamilton Boulevard extension at a cost of $7.4 million are positive moves, he added.

“But I don’t see any vision in the budget,” said Mitchell.

“Yukoners want more and expect more. I can understand why the government tabled its budget on a Thursday afternoon going into the Easter weekend.”

Education spending dropped to $121.8 million from $124.5 million.

As an overall share, the department will get 13.5 per cent of spending, down 0.2 per cent from this year’s estimate.

Health and Social Services remains the largest government expenditure, eating up $220.3 million — roughly one quarter of all government spending.

The Yukon Housing Corporation is providing $1 million for flood relief.

The municipal grant, money provided to Yukon communities mainly for infrastructure projects, has increased $808,000 to $13.3 million.

The new corrections centre received another $5.5 million for planning.

Watson Lake Health Centre receives $6.9 million, but much of that is carried over from previous years.

To keep the mining sector growing, the government will invest $140 million in the 2008/09 year.

Previously announced expenses include $8.3 million for a Whitehorse Airport expansion and $10 million for the Carmacks-to-Pelly Crossing hydro power line.

Also previously announced is $555,000 for a licensed practical nurse program at the Yukon College, and $960,000 for a 30-unit affordable single-parent housing complex meant for single women.

Hardy points to the new nursing program as good news, but there are few new announcements in the budget, he added.

“There’s a lot of re-announcements,” he said.

“He’s announcing things initiated in 2005, 2006, 2007.”

The government also released the supplementary budget for the current year, pushing the previous total estimate up about another $20 million to $863.3 million.

With an $8.6-million surplus and another $130 million in financial assets — up about $30.5 million from earlier estimates — Finance officials say the government starts the new year in a healthy position.

The government should collect an extra $1.7 million in personal income tax in 2007/08.

There are more people paying taxes and they’re making more money, said Finance officials.

A debt that had been written off was repaid, adding another $1.47 million to government coffers.

Curragh Resources, operators of the now-closed Faro mine, paid out money owed to several parties, including the territory.

Details of the negotiations could not be released because of a non-disclosure agreement.