Yukon’s budget springs another leak

Yukon's opposition parties have found one more reason to doubt Premier Dennis Fentie's rosy prediction the territory will post a surplus of $38.5 million in 2011-1.

Yukon’s opposition parties have found one more reason to doubt Premier Dennis Fentie’s rosy prediction the territory will post a surplus of $38.5 million in 2011-12.

The territory hasn’t set aside any money to repay the bondholders who lent Yukon Energy $100 million to help build the expanded Mayo hydro-electric facility and the connection between the Carmacks and Stewart transmission lines.

Gary McRobb, the Liberal’s energy critic, reckons the territory owes bondholders $4.3 million this year. Yet the territory has only set aside one shiny loony – a symbolic “one dollar,” used by bean-counters to indicate more money will be spent when the amount is unclear.

But the terms of the bond deal are clear, said McRobb. The Yukon government will repay $52.5 million of the principal over 32 years, with Yukon Energy paying the balance.

At an interest rate of five per cent, this year the Yukon will owe $2.6 million in interest, and $1.7 million to pay-down part of the principal, for a total of $4.3 million.

“So, where in the budget is it?” he asked during question period on Tuesday.

The government would pay these costs, if it had to, but Yukon Energy “may very well be capable of paying its own way in any given fiscal year,” said Fentie.

McRobb shot back Mayo B’s costs were known last spring, “long before the budget was printed.

“How is this prudent fiscal management?” he asked. “How can we believe this fantasy budget when it’s already out millions of dollars with this one line item alone?”

The NDP’s Steve Cardiff first raised the matter on Monday. He compared the budget to a “shell game”- a term Speaker Ted Staffen quickly ruled out of order.

Fentie asserted the territory’s accounting is all above-board. Cardiff responded by noting the past two budgets promised surpluses and delivered deficits.

He expects the same will happen this year.

“It’s a phantom surplus,” said Cardiff, noting the territory projects, improbably, for its operating costs to fall, when they’ve risen each year in recent memory.

Cardiff asked Fentie when he planned to book this liability: “before or after the election?”

Fentie responded by suggesting Cardiff doesn’t know how to read a budget.

Operating costs are not expected to drop, Fentie asserted. That’s true when you compare these costs to last year’s estimates, as Fentie said you should.

He didn’t mention last year’s estimates for operations costs were off by $50 million.