Yukon facing major federal funding shortfall

The Yukon is going to receive substantially less than expected in territorial transfer payments next year. The shortfall was caused by a change in the way the federal government calculates payments to all three territories.

The Yukon is going to receive substantially less than expected in territorial transfer payments next year.

The shortfall was caused by a change in the way the federal government calculates payments to all three territories.

Premier and Finance Minister Darrell Pasloski said the Yukon will receive $23 million less than it should in the 2016-17 fiscal year. He said the change came as a surprise when his government learned about it earlier this month.

“Two of the foundational principles of the TFF (the formula used to calculate transfer payments) are predictability and stability,” he said. “This notice this late in the year violates those principles.”

Pasloski said he raised the issue with federal Finance Minister Bill Morneau at the finance ministers’ meeting in Ottawa this week.

“I’m hopeful that he’s going to try to find a way to restore the funding. However, he made no commitment to do so.”

For now, Pasloski said, the government will have to tighten its belt as it prepares next year’s budget.

“That’s 23 million less dollars that we have for health care, for education, for tourism and job creation.”

To be clear, Yukon’s transfer payment is still increasing, from $923 million this year to $930 million in 2016-17, including the Canada health and social transfers. That’s not the case in the Northwest Territories, where the transfer payment will actually decrease for the first time since 2008.

And at first glance, it’s unclear how the government calculated a shortfall of $23 million. In the Yukon’s spring budget projections, the government was expecting a payment of $943 million in 2016-17. Given that the territory will actually be receiving $930 million, a shortfall of $13 million seems more accurate.

But Tim Shoniker, director of fiscal relations for the Department of Finance, said Yukon’s estimates have changed since the spring. This year, he said, government tax revenue ended up being less than expected, which should lead to an increase in transfer payments.

Because of that, the Yukon’s latest estimate was closer to $953 million, so $930 million is $23 million less than expected.

At $930 million, next year’s transfer payment will mark an increase of only about 0.75 per cent – less than the rate of inflation. Shoniker said this is the first time that’s happened in at least 15 years.

Still, the rate of increase in transfer payments has slowed over the last several years. Shoniker said that’s partly because spending by provincial and local governments across Canada has dropped, and those changes factor into the territorial transfer payments.

“We don’t need to spend as much to keep up,” he explained.

That decline will likely continue in the coming years as transfer payments factor in the recent drop in oil prices.

But Shoniker said the Yukon government can predict those changes.

“We’re able to forecast the declines that are coming. But this was totally unexpected.”

That’s because Statistics Canada has changed the way it measures spending, and the federal government calculates transfer payments based on those data.

The territorial funding formula is typically revised every five years. But Pasloski said this is year two of the latest five-year agreement. He said methodological changes should be discussed at the end of the five years, not in the middle.

Morneau recently wrote a letter to Pasloski announcing next year’s transfer payment.

“I understand that you have concerns regarding recent changes made by Statistics Canada affecting the calculation of your Territorial Formula Financing amounts,” he wrote. “I have asked my officials to discuss with yours possible options to address this situation going forward.”

This isn’t the only financial shortfall the Yukon government will be facing as it prepares its next budget.

Based on this fall’s supplementary budget, finance officials are expecting $15 million less in personal and corporate income tax this fiscal year than they did when the spring budget was tabled.

Contact Maura Forrest at

maura.forrest@yukon-news.com

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Two people walk up the stairs past an advance polling sign at the Canda Games Centre on April 4. (Haley Ritchie/Yukon News)
April 12 is polling day: Here’s how to vote

If in doubt, electionsyukon.ca has an address-to-riding tool

Yukon Party leader Currie Dixon addressing media at a press conference on April 8. The territorial election is on April 12. (Haley Ritchie/Yukon News)
Getting to know Currie Dixon and the Yukon Party platform

A closer look at the party leader and promises on the campaign trail

Yukon NDP leader Kate White, surrounded by socially distanced candidates, announces her platform in Whitehorse on March 29. (Haley Ritchie/Yukon News)
Getting to know Kate White and the Yukon NDP Platform

A detailed look at the NDP platform and Kate White’s leadership campaign this election

Crystal Schick/Yukon News
Sandy Silver announces the territorial election in Whitehorse. Silver is seeking a second term as premier and third term as Klondike MLA. (Crystal Schick/Yukon News)
Getting to know Sandy Silver and the Yukon Liberal platform

Yukon Liberal Leader Sandy Silver is vying for a second term as… Continue reading

Whitehorse City Hall (Joel Krahn/Yukon News file)
This week at city hall

A look at issues discussed by Whitehorse city council at its April 6 meeting.

Point-in-Time homeless count planned this month

Volunteers will count those in shelters, short-term housing and without shelter in a 24-hour period.

The Yukon’s new ATIPP Act came into effect on April 1. Yukoners can submit ATIPP requests online or at the Legislative Assembly building. (Gabrielle Plonka/Yukon News file)
New ATIPP Act in effect as of April 1

The changes promise increased government transparency

A new conservancy in northern B.C. is adjacent to Mount Edziza Provincial Park. (Courtesy BC Parks)
Ice Mountain Lands near Telegraph Creek, B.C., granted conservancy protection

The conservancy is the first step in a multi-year Tahltan Stewardship Initiative

Yukon RCMP reported a child pornography-related arrest on April 1. (Phil McLachlan/Black Press file)
Whitehorse man arrested on child pornography charges

The 43-year-old was charged with possession of child pornography and making child pornography

Team Yukon athletes wave flags at the 2012 Arctic Winter Games opening ceremony in Whitehorse. The postponed 2022 event in Wood Buffalo, Alta., has been rescheduled for Jan. 29 to Feb. 4, 2023. (Justin Kennedy/Yukon News file)
New dates set for Arctic Winter Games

Wood Buffalo, Alta. will host event Jan. 29 to Feb. 4, 2023

Victoria Gold Corp. has contributed $1 million to the First Nation of Na-cho Nyak Dun after six months of production at the Eagle Gold Mine. (Submitted/Victoria Gold Corp.)
Victoria Gold contributes $1 million to First Nation of Na-cho Nyak Dun

Victoria Gold signed a Comprehensive Cooperation and Benefits Agreement in 2011

Chief Medical Officer of Health Dr. Brendan Hanley speaks to media in Whitehorse on October 30, 2020. Hanley is now encouraging Yukon to continue following health regulations, noting it could still be some time before changes to restrictions are made. (Crystal Schick/Yukon News file)
No active COVID cases in Yukon

Hanley highlights concerns over variants, encourages vaccinations

Most Read