Territorial budget delivers small surplus, no tax increase

The Yukon government has tabled a record $1.39-billion budget, but has steered clear of any new major capital projects.

The Yukon government has tabled a record $1.39-billion budget, but has steered clear of any new major capital projects.

In his budget speech on Thursday, Premier and Finance Minister Darrell Pasloski emphasized his government’s fiscal prudence, including the fact that the territory has no net debt.

“This is a plan that will give Yukoners confidence that our government’s focused and principled approach to fiscal management is working,” he said.

The government plans to post a small, $9.5-million surplus in 2016-17, with no increase in taxes.

The capital budget is down 2.1 per cent from last year, to $306 million. But the territory’s operations and maintenance budget has increased by three per cent, to $1.09 billion.

Overall, federal money accounts for about 85 per cent of the territory’s budget.

While it’s true that the government managed to post a surplus with an overall spending increase, it has also been drawing down the territory’s net financial assets, which are essentially its cash in the bank.

The Yukon’s net financial assets are now estimated at $57 million. That’s down from about $137 million last year, and $223 million in 2014-15.

Those shrinking funds will make it harder for the government to avoid either a deficit or spending cuts next year.

The $306-million capital budget also includes $47 million that was held over from last year. That’s money that was supposed to be spent in 2015-16, but wasn’t.

But Pasloski said the most important thing is that the Yukon has no net debt.

“Every dollar we have in revenue goes to programs or services or capital investment, and that is what is so enviable for our position,” he said in an interview with the News. “Once you crawl into that debt hole, it’s virtually impossible to get out of it.”

The largest chunk of money in this year’s budget, $67 million, will go toward construction of the 150-bed Whistle Bend continuing care facility. Another $15 million will go toward planning of the Whistle Bend subdivision.

The government is also advertising an $11-million increase to health-care funding, a $3-million increase to IT funding and $520,000 for school supplies, which works out to about $100 per student. Discussions are underway with school councils about how to distribute that money.

The budget also includes $3 million for the F.H. Collins technical education wing and another $3 million for the demolition of the old school. A further $400,000 will go to planning of a new francophone high school.

Another $12 million will go toward the Alaska Highway-Shakwak agreement, and $11.4 million will be spent on reconstruction of the Robert Campbell Highway.

The government has committed $7.4 million for the replacement of the Sarah Steele facility, $8.4 million for the new Salvation Army centre and $22 million for the MRI and emergency department expansion of the Whitehorse

General Hospital. It will also spend $1 million on a new mental wellness strategy.

The Whitehorse RCMP detachment will also receive $385,000 for new front-line officers.

And $2 million has been allocated for continued discussions with First Nations about the Next Generation Hydro project.

The Yukon government is also spending $679,000 on this summer’s Council of the Federation meeting, when Canada’s 13 premiers will meet in Whitehorse.

It will also spend $50,000 on two ancient Arctic camel skeletons, one to be placed on exhibit and the other in a reference collection.

Missing from the budget, however, are some of the major commitments the government has made over the last several months, including the paving of the Dawson City airport runway and the construction of a fibre-optic line up the Dempster Highway.

The government plans to spend $395,000 on planning for upgrades to the Dawson City airport, and $500,000 on planning and consultations for the fibre-optic project. But construction is not slated to start before this year’s election.

“It’s frustrating,” said Liberal Leader Sandy Silver. “The only way that the Yukon Party government is going to pave the runway in Dawson is if they win the next election, because then they can decide what they do with the budget money. That fell really, really flat.”

But Pasloski said that planning time is necessary.

“Those things are coming. But you just can’t say, ‘Go build it.’ You have to do the planning first, and sadly, the other parties lose sight of that.”

Silver said this year’s budget takes a “scattershot” approach, with small amounts for different projects, but no major new commitments.

He also said that a $4.2-million pledge for reconciliation with First Nations won’t go very far.

NDP Leader Liz Hanson had strong words for the budget, calling it “uninspired and uninspiring.”

She said the $520,000 for students’ school supplies was a cynical attempt at “blatant vote-buying.”

“It speaks to a fundamental disrespect for the citizen,” she said. “If you’re struggling, and a lot of families are, you are basically saying ‘Well, here’s a little token, but we’re not going to deal with the real issues.’”

Also notable in the budget is a major drop in last year’s corporate income tax revenue. Last spring, corporate income tax was forecast at about $26.5 million. Now, it’s estimated at just $7 million. The forecast for 2016-17 is about $14.5 million.

Finance officials said adjustments from prior years account for over half of that $19.5 million shortfall. The rest is due to an economy that was weaker than expected. 

Last year’s surplus also shrank dramatically. It’s now estimated at just $1.2 million, down from a predicted $23 million last spring.

In what looks to become an important election issue, Pasloski also highlighted his opposition to a carbon tax during his speech.

“It doesn’t work for the northern way of life,” he said, claiming the Liberals and NDP both support a carbon tax.

Both Hanson and Silver suggested they are considering some form of carbon pricing, though neither would say exactly what that might look like.

Contact Maura Forrest at

maura.forrest@yukon-news.com

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