Record spending in Yukon budget

Yukon Premier Dennis Fentie has presented a $1.08-billion budget that promises another year of record spending, one that opposition MLAs say will burden future generations with massive debt.

In introducing the budget in the legislature Thursday, Fentie, who is also the Yukon's finance minister, said he has laid out a responsible spending plan that will see the Yukon into the future.

"The 2010-2011 budget is not just a budget for today, it is a budget for tomorrow," Fentie told the legislative assemblyin his budget address.

"We are proud of this budget and all the good work it will do."

$23M deficit in 2009-10

The 2010-11budget projects revenues of $1.05 billion and expenditures of $1.08 billion, but the government said that because of various adjustments, it'll have a $2.9-million surplus by the end of the fiscal year.

However, the government will be coming out of the 2009-10 fiscal year with a $23-million deficit, about $11 million of which was spentbythe Health and Social Services Department.

The departmentsaid increases in social assistance payments, an H1N1 influenza vaccination campaign last fall and medical travel costs were responsible for the extra spending.

Fentie tabled a supplementary budget on Thursday to cover those extra costs.

The federal government's directtransfers to the Yukonaccount for almost $691 million of the Yukon's projected revenue in 2010-11.

The budget does not include any tax increases, but the government appears to be benefiting from a growing economy an estimated $11.2 million in corporate income tax was collected in 2009-10, up from $6.4 million the year before.

The government expects to collect $11.8 million in corporate income tax revenuein the coming year.

$527K a year for home care

Some of the budget's spending promises werealready announced by Fentie and his fellow Yukon Party government ministers this week, including:

• $15 million for residential and agricultural land developments across the territory.
• A total of $7.5 million to upgrade some highways, including the North Klondike Highway and Robert Campbell Highway, as well as upgrade and repair various bridges.
• An additional $110,000 in annual funding each for three youth groups: the Boys and Girls Club of Whitehorse, the Youth of Today Society and the Bringing Youth Towards Equality organization.
• An annual $527,000 increase to improve home-care services.
• An additional $500,000 to support tourism marketing programs that promote the Yukon as a travel destination.

Other spending highlights that were announced in Thursday's budget include:

• Nearly $34 million to clean up the defunct Faro lead-zinc mine.
• $28 million towards a new territorial jail in Whitehorse.
• $2.7 million to design a new building for F.H. Collins Secondary School in Whitehorse.
• $1 million to support the City of Whitehorse as it prepares to host the Arctic Winter Games in 2012.

The budget also sets aside millions of dollars to build and renovate social housing units, including $7 million to replace the Korbo Apartments in Dawson City and $3.3 million to complete an affordable housing complex for single-parent families in Whitehorse's Riverdale subdivision.

Among the budget's environmental initiatives, millions of dollars have been earmarked to upgrade water treatment services in various communities across the territory.

Mine openings fuel optimism

Fentie said this year will see two new mines Yukon Zinc's Wolverine mine and Alexco Resource Corp.'s Bellekeno silver mine operating by this summer, in addition to Capstone Copper Corp.'s Minto mine.

"This is a major achievement for the Yukon, with mining now fully back in the territory as one of the prime economic generators," Fentie said in his budget speech.

He added that revenue from mineral exploration in the Yukon could exceed $150 million this year.

At the same time, Fentie spoke of the environmental challenges related to remediating the Faro mine, which has hundreds of millions of tonnes of toxic waste tailings and rocks.

Fentie said while the federal government bears the financial responsibility for the mine remediation, the Yukon is responsible for carrying out the clean-up work. Work on the site will proceed this year, he added.

"The site work totalling $33.923 million will reduce environmental risk and protect human health and safety, while providing economic opportunities for First Nations," Fentie said.

Contract negotiations could shrink surplus

Although the government is projecting a$2.9-million surplus this year, finance officials say that could change depending on the outcome of contract negotiations with two groups of civil servants.

The Yukon Teachers' Association and the Yukon Employees Union representing a total of about 4,700 workers are currently negotiating new collective agreements.

The Finance Department says any wage hikes included in those contracts will cost the government around $3 million for each percentage point increase.

As well, the government might need to help fund several major infrastructure projects, including the Yukon Hospital Corp.'s construction of facilities in Dawson City, Watson Lake and Whitehorse, and Yukon Energy Corp.'s expansion of the Mayo B hydroelectric dam.

The corporations are working out their own financing arrangements for those projects, but the government has said it will provide backup funds if needed.