Silver serves up tiny surplus but predicts future deficits

Premier Sandy Silver tabled a $1.44-billion budget for 2017-18 and managed to avoid running a deficit, albeit by a thin margin.

Premier Sandy Silver tabled a $1.44-billion budget for 2017-18 and managed to avoid running a deficit, albeit by a thin margin.

Forecasts suggest he’ll need to make some changes if he wants to avoid a deficit in the future. This year’s budget predicts a $6.5-million surplus.

That’s the most optimistic outlook for the next few years. The government’s projections predict the territory will face a $49-million deficit in 2018-19, a $58-million deficit the next year and a $42-million deficit the year after that.

The premier accused the former Yukon Party government of not fully accounting for ongoing operations and maintenance costs.

“This deficit is a result of 14 years of Yukon Party spending. Spending on large projects without a plan for ongoing costs. Spending without a full plan, and commitments made for political reasons and not practical reasons,” he said.

“By excluding major operating and maintenance costs from a budget, such as the $30- to $35 million required for the Whistle Bend continuing care facility, you’re putting off the inevitable. Unfortunately, this was a common practice in the past.”

Silver has put together an independent financial advisory panel that will be making recommendations regarding the territory’s financial future.

The premier said he would be willing to run future deficits. Federal funding models often require the territory contribute cash for projects.

“When you’re getting dollar values from Ottawa at three to one,” he said. “No other jurisdictions other than the territories get that. Would you leave that money on the table?”

As for this budget and its razor-thin surplus, Silver said he is hopeful the territory can stay in the black for the year thanks to the amount of work staff have put into their calculations.

The government followed through with its election promise to cut the general corporate tax rate to 12 per cent, down from 15 per cent.

That would put the territory in the middle of the pack compared to other jurisdictions. The Northwest Territories, for example, has a rate of 11.5 per cent. Nunavut’s is 12 per cent.

But the government is breaking its election promise to eliminate the small business tax by July 1.

“When you decide on a budget before you get into government, you think that there’s a surplus. You make decisions based upon that,” Silver said.

The Yukon’s projected $9.5-million surplus for last year became an $8.2-million deficit, a supplementary budget shows.

Instead of disappearing, the small busines tax is slated to shrink to two per cent from three per cent.

Silver said he now wants to talk to the business community to see if they think eliminating the tax completely is the right thing to do.

He said he has “new evidence” that the tax cut would not reach businesses run by sole proprietors.

“We’re going to engage with the chambers and we’re going to come back with a solution. Either commit to the zero or do something else that could help with the sole proprietors.”

The only tax set to increase is the tobacco tax. It will go up from 21 cents per cigarette or gram of loose tobacco to 25 cents on July 1. The tax will go up to 30 cents on April 1, 2018.

The tobacco tax hasn’t gone up in years, the premier said. “We’re the lowest in the territories. So what we’re doing is we’re getting back up to where we’re supposed to be.”

Tobacco taxes should offset any losses from lowering the other tax rates. By 2018-19 the government predicts it will earn an extra $1.5 million from tobacco.

Both opposition parties took jabs at the government over its tax changes, though for opposite reasons.

“They did campaign on a promise to eliminate that (small business) tax, and I believe that a lot of Yukoners voted for a government that was willing to do that,” said Yukon Party interim leader Stacey Hassard.

Meanwhile NDP Leader Liz Hanson said she would have been OK with the government breaking its promise to reduce the corporate tax rate.

“Why would you keep cutting those revenues? Are we a government or are we an agency for flowing through federal funds?”

Federal funds make up 86 per cent of this budget’s revenue.

Other budget highlights include $35.8 million for highway repairs and more than $4 million for a suite of housing projects.

The government will spend $160,000 in capital costs and $1.49 million in operating costs for 11 new full-time addictions and mental wellness workers in eight communities outside of Whitehorse.

It will be spending $97,000 for a two-year coordinator of the government’s participation in the murdered and missing indigenous women and girls inquiry.

The budget lists $150,000 for planning a Yukon-wide land-based healing program similar to the one that is already happening at Jackson Lake.

This year $8 million is being set aside for the development of a new French-language high school. Estimates show the entire project costing $20 million and being completed in 2018-19

The largest project on the list is the continuing care facility in Whistle Bend. The government is setting aside $68 million this year towards the $146 million construction cost. A final $15 million is planned for 2018-19.

Four million dollars will go to more staff for Yukon schools.

The government predicts it will spend the next few years eating away at the territory’s net financial assets, often referred to as the cash in the bank.

When it was in power, Yukon Party often boasted that the territory had “no net debt.”

Current predictions suggest that won’t be true by the end of 2018-19.

The government is predicting a net debt of $77 million by the end of that year, growing to $148 million the next year and $216 million the year after that.

Going into net debt does not guarantee that the territory will have to start borrowing because not all of the debt comes due at the same time.

Contact Ashley Joannou at