Yukon College must crack its piggybank to pay for spiralling cost overruns for its new campus at Pelly Crossing.
It’s the first time the college has been asked to help pay for the construction of a government-owned building. To the Liberal opposition, it’s another sign the deficit-spending territorial government is broke.
The Education Department has also moved $150,000 from its operations and maintenance budget to offset the Pelly campus’s rising costs.
This is unusual: typically, when a project goes over cost, a department simply asks the financial management board for more money.
“The government seems to be showing it’s running out of money,” said Liberal Leader Arthur Mitchell.
In both instances, the territory is “robbing Peter to pay Paul,” he said.
The new campus was supposed to have cost $1.4 million, half of which would be covered by the federal government’s stimulus funds. But community consultations dragged on far later than expected, and the lowest bid, by Grey Wolf Construction, came in $620,000 over budget.
As a result, the college must chip-in up to $300,000 from its reserves, a rainy-day fund set aside for unexpected expenses.
The college agreed to pay any cost-overruns for the Pelly campus when it struck a deal with the Education Department in September of 2009.
“It was their project,” said Education Minister Patrick Rouble. “They were taking the lead on it.”
The college’s payment may by halved, to $125,000, if Ottawa agrees to match spending on the overruns.
The college still has more than $1 million in reserves, said President Terry Weninger.
Pelly Crossing’s satellite campus was once housed in an old, mould-ridden building that was eventually condemned and demolished. Students currently meet in a portable.
Between 100 and 120 students from Pelly Crossing enrolled last year, said Dave Mchardy, the college’s director of extension services. Many are adults with low literacy.
Plans for a new Pelly campus have been on the books for more than a decade, said Weninger. He insisted that work on the new campus is “a good news story,” despite the requirement that the college dip into its reserves.
“There’s nothing sinister about this,” he said.
Work to build a new campus in Dawson City and a new research facility in Whitehorse both remain on budget. But if these projects do exceed their budgets, the college would also be on the hook.
The $150,000 shifted from Education’s operations had been earmarked for “labour market programs and services” delivered by the Advanced Education branch, said spokesperson Yumimi Pang.
Women in Trades and Technology, Skills Canada Yukon and the Youth Employment Strategy are examples of programs that are paid with this pot of money.
No programs will see cuts, said Pang. The money, set aside in last year’s budget, had gone unspent.
But unspent money is usually “revoted” on by MLAs to that it remains dedicated to its original purpose. In this case, the money is being moved, leading the Liberals to call it a cut.
Premier Dennis Fentie’s optimistic projections of a $3 million surplus this fiscal year were revised this month to a deficit of $2.4 million. Revised figures for 2009 show a deficit of $25 million.
This spending has eaten into the territory’s savings, which have been run down over three years from $165 million to $33 million.
And that’s counting $25.5 million locked-up in investments in asset-backed commercial paper. Most of that money remains frozen until 2017, if it is repaid at all.
Subtract it and you’re left with just $8.5 million.
But that may be painting an unduly grim picture. These figures all refer to net financial resources, which is calculated by subtracting liabilities from assets. Some of those liabilities are long-term, such as pensions that must be paid to employees in 20 years’ time.
A rosier view is offered by Clarke Laprairie, assistant deputy minister of Finance, who notes the territory has about $250 million in cash in its coffers at any given time.
But much of this money is spoken for, and cash at hand continues to dwindle as the territory spends more than it takes in.
Meanwhile, Crown corporations are collectively borrowing $167 million to upgrade hydro-electric facilities and build new hospitals and a medical residence.
Yukon Energy claims the $100 million it is borrowing will pay for itself in energy savings. But the $67 million borrowed by Yukon Hospital Corporation will have to be repaid by future governments.
Contact John Thompson at email@example.com.