Territorial budget documents photographed in Whitehorse on March 4, 2021. The budget details operations and maintenance and capital spending for 2021-2022. (Haley Ritchie/Yukon News)

Territorial budget documents photographed in Whitehorse on March 4, 2021. The budget details operations and maintenance and capital spending for 2021-2022. (Haley Ritchie/Yukon News)

Territorial budget predicts deficit of $12.7 million, reduced pandemic spending in 2021-2022

If recovery goes well, the territory could end up with a very small surplus.

Blame it on the bug: this time last year the Liberal government was projecting a small surplus, but COVID-19 has the territory in the red with a deficit of $12.7 million.

The territorial budget for 2021-2022 was released March 4, with room for some post-pandemic flexibility.

If recovery goes well, the territory could end up with a very small surplus. There are also line items for things like affordable childcare, transportation upgrades and infrastructure projects in the communities.

“The budget reflects our vision for the future of the Yukon: a healthier, more vibrant, sustainable, and inclusive territory for the benefit of all Yukoners,” said Premier Sandy Silver, who highlighted the government’s priorities — past and present — in a lengthy budget address on the first day back in the legislature.

Operations and maintenance spending privy to big initiatives

The government’s operation and maintenance budget is $1.35 billion, a 7.7 per cent increase from the 2020-21 main estimates.

The Health and Social Services Department takes the lion’s share of the operations and maintenance budget, as is standard, at $471 million — more than double any other department and up $22 million from last year.

The Putting People First plan, which calls for a systemic overhaul of health and social services in the territory, is reflected in that spending breakdown, the government says.

Early learning will cost $25.2 million. That includes $15 million towards universal childcare, kicking in on April 1, which Silver estimated will save families $700 per month, per child.

There will also be $86.8 million spent on continuing care and $70.2 million for social, substance use and mental wellness supports.

The Education Department has the second-highest funding at $220 million. Schools will take $125 million of that allocation, not including $27.6 million pledged to Yukon University. First Nations initiatives have been granted $8.4 million.

Operations and maintenance for Highways and Public Works are estimated at $154 million. Transportation encompasses $65 million, and property management encompasses $49 million.

The Department of Community Services has been allocated $106 million. About $48 million will go towards “community development” and $37 million towards protective services.

The remaining governmental departments are each estimated to spend less than $100 million.

Yukon Party leader Currie Dixon reacts to the territorial budget in Whitehorse on March 4,2021. (Haley Ritchie/Yukon News)

Major capital projects planned

Overall, capital spending is up by 17 per cent, at $434 million. Priorities for the government appear to be upgrading transportation infrastructure and major changes to healthcare and education.

For context, the government increased capital spending by 14 per cent last year.

Big ticket items related to transportation include aviation projects, replacement of bridges, highway planning and engineering, including $15 to $20 million for the Yukon Resource Gateway project and a similar amount for reconstruction on the Klondike highway.

An estimated $14.4 million will be spent on green infrastructure and government retrofits. The Yukon government has pledged a total of $50 million to address climate change, which will include electric vehicles, energy rebates and community energy retrofit projects.

A total of $97 million is allocated for infrastructure projects for the communities and First Nations. Various upgrades are planned, including community sewage lagoons and wastewater operations, recreation facilities and firehall upgrades in Teslin, Watson Lake, Carmacks and Faro.

Other capital spending items include:

$10 million for a new Whistle Bend elementary school

$4 million for a school extension in Dawson City

$20.1 million for the Dempster Fibre Project

$400,000 for implementing midwifery

$20 to $25 million for development of land in Whistle Bend

$15 to $20 million for housing and $10 to $15 million for a new health and wellness centre in Old Crow

$5.7 million for a new secure medical unit at the Whitehorse General Hospital

The Nisultin Bay Bridge is not expected to be completed until 2024-25. The Dempster Fibre Project is expected to be complete in 2023-24.

Revenue steady, net debt increasing

Total government revenue will be $1.37 billion this year, in spite of a decrease in personal income taxes due to the pandemic. The forecasted revenue is an increase of 5.1 per cent from last year’s main estimates, with another 5.8 per cent increase estimated for next year.

Decreases in personal and fuel oil taxes are expected, though the pandemic’s continued effect on personal earnings is “difficult to predict.” Corporate income taxes are expected to increase.

More than 80 per cent of the Yukon’s total projected revenue comes from federal transfer payments. The federal grant is determined according to the Yukon’s ability to collect revenue from resource extraction. When Victoria Gold’s Eagle Gold Mine begins paying royalties, which is anticipated in 2022-23, the federal fund will decline accordingly.

The territory’s net debt is expected to increase substantially. This year’s main estimates project $175 million in net debt — more than double what was projected in the 2020-21 main estimates.

Over the next three years, net debt is expected to nearly double again, with $330 million in net debt built into the plan for 2023-24.

The government says the net debt increase is due to forecasted pandemic spending and necessary infrastructure investments.

“While net debt is increasing, our infrastructure and assets will also continue to rise and then be revitalized. We will not allow Yukon communities to fall into a state of disrepair,” Silver said.

NDP leader Kate White said she thinks there is lots missing from the budget as she speaks to reporters in Whitehorse on March 4, 2021.(Haley Ritchie/Yukon News)

Budget padded for COVID-19

Inevitably, COVID-19 has had an impact on the budget, although the government is banking on vaccines curbing big spending on virus control.

For example, the government budgeted $107.6 million on pandemic relief in 2020-2021. This year, only around $49 million is currently allocated, including $5 million for business relief and $6.5 for the tourism industry.

The budget does take the unusual step of building in some generous flexibility if the pandemic situation changes.

Although it will not be assigned to a specific department, $15 million has been built into the budget to allow for unpredictable expenses attributed to the virus. That amount will allow the government to spend as necessary on things like border control and health measures.

If recovery goes well and it remains unspent, that money could cancel out the projected deficit.

Opposition parties call budget short-sighted, lacking social supports

Unsurprisingly, both opposition parties criticized the budget. They both suggested the Liberals were scrambling at the end of their mandate to institute promises like midwifery and childcare during an election year.

Silver disagreed. He suggested the Liberals would not call an election until after the budget was passed.

“We’re committed right now to making sure that we move through the budget process,” he said.

“I really wish we could get things out the door quicker. But at the same time, things take time. In every single one of those years, we’ve been extremely busy as the government,” he said, addressing opposition criticism.

Yukon Party leader Currie Dixon said he was concerned about the rising net debt, but also said the budget document wasn’t “forward-thinking” enough to comfort business owners who have been hurt by the pandemic.

“We see no path to get through the pandemic and emerge in a stronger position,” Dixon said. “We have seen commitment to all of the projects and commitments that they made in 2016 that have gone unfulfilled.”

NDP Leader Kate White released a press release noting six things her party believes are missing from the document. White said she would have liked to see more items related to wages, affordable housing, healthcare and climate change.

While the NDP has been advocating for affordable childcare, White said the Liberal announcement helps with the cost of care but does not do enough to make new spaces available and train educators.

Despite a commitment in the house on March 4 that the government is working to address overdose deaths, White noted that the opioid crisis did not warrant a mention in the premier’s budget address.

“There’s lots of money going to lots of places and no attention in others,” she said. “Governments will make choices, and mine would be different.”

Contact Haley Ritchie at haley.ritchie@yukon-news.com