Deficit Days: What you need to know about Yukon budget 2018

Yukon's annual budget the second of the current Liberal government will be tabled Thursday in the Yukon legislature.

It's expected that Premier and Finance Minister Sandy Silver will lay out a clear plan forward one that will reflect which elements he's adopted from recommendations of the financial advisory panel.

When Silver tabled his first budget last year, he tempered expectations by warning that the territory would be in a deficitstarting in 2018,carrying forward over the next few years.

CBC has again enlisted the help and expertise of the government's Management Board Secretariat (abody responsible for providing officials with analysis ongovernment finances and also helps prepare budget documents)to make sense of the numbers.

• BUDGET 2017 |Yukon budget for dummies: Making sense of the numbers, ahead of budget day

Balanced budgets are over for now

In the fall, the Finance Department revealed Yukon has net financial assets of $11.2 million; that's compared to $223 million as of April 1, 2015.

Last year's budget was$1.44 billion the government's largest ever with a projected surplus of $6.5 million. The actual surplus was $3.1 million.

• Yukon Liberals' first budget delivers $6.5M surplus, but predicts deficits to come

Last yearSilver projecteddeficits spending beyond income to be $49 million in 2018/19, $58 million in 2019/20 and $42 million in 2020/21. It appears the deficitis going to be less than expected, according to Silver Wednesday.

Yukon's borrowing limit is currently $400 million.

That compares to Nunavut at $650 million and theNorthwest Territories at $1.3 billion. The two territories had their spending limits increased in 2015. Yukon's limit has not been raised since 2012.

With about 2,000 more people than Yukon, the N.W.T. currently has $1 billion in long and short-term debt.That's compared to Yukon's consolidated debt of $193.5 million as of March 31, 2017.

Thatamount of debt means the Yukon government has $206.5 million in borrowing room.

If Yukon wanted to undertake a large scale project, it may need more than that.

Yukon's debt capcan be increased, but the finance minister would have to request the federal Treasury Board to do that.

The territorial government has no debt on the "non-consolidated" side a term for all government money coming in and going out,but not including figures from Crown corporations.

But under its "consolidated" entities that is, the Yukon Development Corporation,the Yukon Energy Corporation and the Yukon Hospital Corporation it has debt.

The Yukon Housing Corporation and the Yukon Liquor Corporation also fall under the consolidated books but unlike the other corporations, they don't stand alone financially.

Put simply, some corporations have more financial independence than others.

The Yukon Hospital Corporation has afair bit of autonomyto pay for things such as doctor's contracts, and to set hospital bed fees,but it must go to the government when seeking significant amounts of cash for example, when building a new community hospital.

Another example:ifthe Yukon Development Corporationwanted to do a massive project like building a transmission line to connect to B.C.'s 'Site C' dam Yukon'senergy minister floated this idea in January at the Mineral Roundup conference Yukon likely wouldn't have enough borrowing power to pay for its share (with just $206.5 million in borrowing room).

Big ticket items to watch for:

• Health care costs, most significantly, those relating to caring for seniors.
• Costs for staffing and finishing Whistle Bend Care Facility. (The government says the facility will need between 200 and 250 workers in place before the anticipated opening this fall)
• Carbon tax and how it will work in Yukon. (Yukon businesses, industry, governments are watching for clear details.) Watchalso for specifics on green energy, renewable technology, building retrofits.
• Plans for long-term energy. (The government is looking for analysts to do a complete financial overview of Yukon Energy, but it's unclearhow serious the government is about connecting to the B.C. grid.)
• Cannabis sales andthe projected benefit for Yukon
• Funding for the Shakwak project
• Paving and upgrading the Dawson City airport

Additionally there's a slew of bricks and mortaron the government's list: commitments to begin construction of the Francophone high school, tackling the issue of the sagging Ross River schooland the same permafrost issue confronting the Dawson City rec centre.

What will the government spend on highways?

Spending on highways and bridges is typically a large chunk of the infrastructure budget.

Don't hold your breath for any substantial spend on the Gateway roadwork though (announced last September by Trudeau and Silver). That multi-year $360 million project is stillin the preliminary stages, as noted at the recent conference on procurement.

We can look for initial spending on a $121 million, multi-year commitment for reconstruction work on the North Klondike highway, from Pelly Crossing to Dawson City.

This is the main artery to manysecondary roads that access mining projects.

Yukon's share won't be large though, as Yukon is asking Ottawa to pitch in $91 million over 10 years, with Yukon paying $30 million over the same period.

Additionally, there's been a flurry of interest in the MacMillan Pass area, situated at the Yukon/N.W.T. border. This was a problem area last year, and companies eager to begin an aggressive exploration season want stable roads and bridges there.

• Yukon government puts a lid on oil and gas interest in territory

The Campbell Highway, in the same neighbourhood, has been in a sad state of neglect for years, with acceptable standards ending precisely where the access road to Faro begins. The 10 kilometre access road off the Campbell to Ross River is also in deplorable state.

Also recall that the Liberals made the bold (and sensible) commitment to produce a five-year capital plan by March 1 of each year so industry can get its ducks in a row.

Highways and Public Works Minister Richard Mostyn deferred that plan last year, pleading new government status.

If it doesn't appear on Thursday, industry will want to know why.

Taxes?

The financial advisory panel noted that Yukoners are under-taxed in comparison to the provinces.

There are a few pockets where the Liberals may feel they can raise some revenue think increased fees for services such as campgrounds, hunting and fishing licenses and driving licences and registration.

Other possible taxes could include a hotel tax (aimed primarily at out-of-territory visitors) and a payroll tax (aimed at out-of-territory workers).

• Yukon government told sales tax best way to raise revenue
• Spend less, tax more: Opposition gives their two cents on Yukon financial panel's report

We can forget about implementingthe harmonized sales tax (HST),cuts to the civil service, andan increase to placer gold miningroyalties, though.Those things were not included in Silver's "everything is on the table" list.

And in terms of the HSTand cuts to government workforce, precludingthem may have been politically expedient for the government,but financially foolishbecause they representsizeable revenue sources that havebeen rejected.

And that brings us back to the multi-year deficit.

More analysis from Nancy Thomson:

• 5 things to watch in the Yukon Legislature's spring sitting
• More than a year in, what has Sandy Silver's Liberal government done for Yukon?
• The Yukon Legislature fall sitting: what got done, and what didn't