Yukon budget for dummies: Making sense of the numbers, ahead of budget day
Premier Sandy Silver will introduce his government's first budget on Thursday
Yukon's new government will table its long-awaited first budget this week, and the speculation is intense — it'll be the territory's first Liberal budget in 15 years, as the Yukon Party held office from 2002 to 2016.
There will be many questions in the legislature about government spending, both in question period and during budget debate.
So to help Yukoners cut through the rhetoric and sift through the numbers headed their way, here's a "look at the books" — a kind of Yukon budget primer.
CBC enlisted the help and expertise of the government's Management Board Secretariat to make sense of the numbers.
First of all: terminology.
The numbers dealt with here are from the government's "non-consolidated" financial summary, which means all government money coming in and going out — but not including figures from Crown corporations such as the Yukon Energy Corporation, the Yukon Development Corporation, and the Yukon Hospital Corporation.
Last year's budget biggest one yet
He touted "a balanced budget with no net debt" and a surplus of $9.4 million.
The budget was debated, voted on, and passed in the 2016 spring sitting.
Those were the forecast numbers — the bean counters at the Management Board Secretariat won't know the "actuals" in full until late October. A supplementary budget will be tabled on Thursday, along with the government's main 2017/18 budget. Normally, the supplementary budget is debated — and voted on — in the fall sitting. That didn't happen last fall because the election was called and there was no fall sitting.
For some context, consider the books from the year before — 2015/16. These numbers are a lot more tangible because they are "actuals," which have been reported in the Public Accounts from the Yukon's finance department.
Yukon's net financial assets (actual "cash in the bank"), meanwhile, were nearly $153.4 million at the end of 2015/16, while the forecast net assets were considerably less ($131.7 million).
The difference can be explained in large part by the Dawson wastewater treatment facility (valued at $24.9 million) being added that year to the government books as a "tangible capital asset."
The forecasted net financial assets for 2016/17 ($57 million) are also expected to change.
As for Pasloski's projected $9.4 million surplus last year — not going to happen, when you factor in spending that occurred after the budget document was tabled.
Yukon Party's pre-election shopping list
There were a number of big ticket items that soaked up money after the last spring sitting ended — in other words, spending that was not debated (or voted on) in the legislature.
More to the point, it's spending that was not budgeted for:
- A new collective agreement with the Yukon Employees Union: $5.5 million in 2016, according to Public Service Commission officials. Expect another $4.3 million in 2017 and $4.4 million in 2018;
- Renovations at the MacBride Museum: $3 million (Yukon government's portion of a $6 million project);
- Opening 10 new beds at the Thomson Centre for extended care: $5 million;
- Severance packages for MLAs, cabinet staff: approximately $624,700;
- Royal Visit last fall: $429,000.
That tallies up to $14.5 million, a figure that easily consumes the anticipated surplus of $9.4 million.
That additional spending must be taken into account before Silver's government makes its mark by delivering on some signature election promises, such as $10 million for the Yukon Development Corporation, $30 million per year for energy retrofits, increases in health care spending, housing for communities, and other expenses such as compensating miners for claims within municipalities.
Special Warrants: Gov't gives itself an advance
It's not uncommon for governments to issue what are called "special warrants," essentially advances before the main budget has been tabled, debated and voted on in the legislature.
They usually happen in early spring, in order to see the government through to its 'pay-day' — the new budget.
That's exactly what happened last January, when the new government issued a $29.4 million special warrant. The order-in-council said it was needed to cover government operations until March 31, the end of the fiscal year.
The government then issued another special warrant to the tune of a much more substantial $427 million. That too is for financing government operations — keeping the lights on, if you will — until this week's budget is debated and voted on.
In opposition, Silver castigated the Yukon Party for issuing such warrants. Now the Yukon Party has thrown that criticism back in his face.
Officials with the Management Board Secretariat say warrants aren't necessarily the most democratic way to spend public funds. But the Liberals claim they can plead special circumstances, given that they're assuming the financial affairs of a government that was in power for 14 years.
Next year, any such latitude will be gone, and the public could be less forgiving.
In sum, the state of the Yukon's finances are unlikely to be as the Yukon Party forecast a year ago.
The surplus will be gone, so expect a deficit budget — the first since former Yukon Premier Dennis Fentie's last budget in 2010/11.
Premier and finance minister Sandy Silver has indicated that the deficit this year will be in the neighbourhood of $8 million.
But the territory will still have no net debt.
Annual allowance from Ottawa
Thank goodness for Ottawa.
Last year, federal contributions amounted to 85 per cent of Yukon's total budget.
This fiscal year (2017/18) Yukon will receive $972 million in federal transfers. That includes the Canada Health Transfer and the Canada Social Transfer. It works out to about $25,884 per Yukoner.
Compare that to the $1,388 per person in transfers that Ottawa gives B.C. (where annual transfers of $6.7 billion get spread over a population of 4.7 million), or the $28,867 in per capita transfers to the N.W.T., or $42,055 to Nunavut.
Yukon also gets "recoveries" from Canada. Last year (2016/17) that figure came to about $126.4 million.
That includes contributions to the federal infrastructure funds, that is, the portion that Canada kicks in to Yukon government projects. This category also includes money that Ottawa gives the territory for things such as health, policing, early childhood learning, and remediation and inspection of Type II mines (i.e., Faro).
Another column called "third party recoveries" amounted to $29.3 million last year. That included money contributed from the U.S. for the Shakwak highway project.
Then, add in various Yukon tax revenues such as personal and corporate income tax, the fuel tax (which is distinct from the gas tax), tobacco tax (tax revenue estimated at $112.3 million last year), and then factor in land sales, and a plethora of licences, fees, registrations and permits ($41.4 million last year) for a grand total of about $1.3 billion in total revenue.
Back in the 'real world'
There's light on the horizon when it comes to what powers the economy in the "real" world: the private sector.
Yukon's mining sector has been in the doldrums for the last few years, but that's promised to reverse.
Respected financial analyst John Ing has said it's "a new day" when it comes to the resurgence of the Yukon's mining sector.
The territorial government's own outlook said the economy was bleak in 2015, with the Gross Domestic Product (GDP) down by 3.8 per cent. It said the GDP would grow by a modest 2.8 per cent in 2016, primarily because the Minto mine (the Yukon's only operating mine) would be stripping its North pit.
Early expectations for 2017 were much more dire, with the real GDP projected to fall by 5.7 percent.
But hold that thought. A surge in mineral exploration and spending could yank the Yukon economy back from brink.
And then maybe, just maybe, private sector spending may actually fuel the economy.
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