Yukon will post a $29-million deficit for 2009, says Statistics Canada.
Not so, say the territory’s bean counters, who predict a $19.4-million surplus.
Who is correct? It all depends on which set of accounting rules you follow.
The territory uses accrual accounting, and one consequence of this method is that the cost of big, multi-year capital projects are spread over a number of years.
Statistics Canada, by contrast, uses modified cash accounting, which tracks money as it goes in and out of government coffers.
Both methods are perfectly legitimate, said Claude Villancourt with Statistics Canada.
But Yukon’s switch to accrual accounting in 2004-05 has made it possible for the territory to spend more money than it receives and still stay in the black.
This should be kept in mind when Premier Dennis Fentie boasts his government is projecting its seventh consecutive surplus, said Yukon economist Keith Halliday.
“On a cash basis, he’s run a deficit several times, including this year,” said Halliday.
“That would put him in the same category as Pat Duncan and Piers Macdonald,” he said, referring to the former Liberal and NDP premiers.
“In that sense, he hasn’t been completely honest with Yukoners in his claims in budget speeches, in which he says he’s a better fiscal manager than previous premiers.”
And there’s another reason to be worried, said Halliday.
If Yukon keeps spending more money than it takes in, this will eventually catch up to us, no matter how we balance the books.
“If you’re running down your cash surplus, which we are this year by $29 million, eventually our surplus is going to run out,” said Halliday.
“We’ve got $150 million in the bank as of April 1. Take away $36 million that’s frozen in asset-backed commercial paper, $29 million for this year’s deficit, and then the $71 million that they may or may not need to spend on Mayo B (hydro expansion), and pretty soon our cash surplus is getting pretty low.”
But, for now, Yukon’s economy is being kept afloat on an unprecedented amount of federal cash.
Yukon saw Canada’s biggest increase in federal spending this year, notes Statistics Canada in the same June 16 report that describes the territory’s projected cash deficit.
Yukon’s federal transfers grew by 29.7 per cent, followed by Saskatchewan at 29.4 per cent, and the Northwest Territories at 22.4 per cent.
And local government spending in the Yukon this year has outpaced the rest of the country by a large margin. It’s up by 21.6 per cent in the territory, followed by 10.9 per cent in Saskatchewan and 9.7 per cent in British Columbia.
Contact John Thompson at
johnt@yukon-news.com.