Yukon budget for dummies: Making sense of the numbers, ahead of budget day

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 willbe 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 dealtwith 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

Last year's (2016/17) budget was $1.39billion, making it the territory's biggest yet (up from$1.37 billion in 2015/16). It was also the last budget of Yukon Party premier and finance minister Darrell Pasloski.

He touted "a balanced budget with no net debt" and a surplus of $9.4million.

The budget was debated, voted on, and passed in the 2016 spring sitting.

• Yukon government delivers surplus budget as election looms

Those were the forecast numbers the bean counters at the Management Board Secretariatwon't know the "actuals"in full until late October. A supplementary budget will be tabled on Thursday, along withthe government's main 2017/18 budget.Normally, the supplementary budget is debated and voted on in the fall sitting. That didn't happen lastfall because the election wascalled and there was no fall sitting.

For some context, considerthe 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.

The Yukon government forecasted a surplus that year of $23.2million, but the actual surplus was$13.7million the Yukon Party spent down the surplus by about $9.5 million.

Yukon's net financial assets (actual "cash in the bank"), meanwhile, were nearly $153.4million 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 bythe Dawson wastewater treatment facility (valued at$24.9 million) beingadded that year to the government books as a "tangible capital asset."

• Yukon government to own Dawson City sewage plant

The forecasted net financial assets for 2016/17 ($57million) are also expected to change.

As for Pasloski'sprojected $9.4 millionsurplus last year not going to happen, when you factor in spending that occurred afterthe budget document was tabled.

Yukon Party's pre-election shopping list

There were a number of big ticket items that soaked up moneyafterthe last spring sitting ended in other words, spending that was not debated (orvoted on) in the legislature.

More to the point, it's spending that was not budgeted for:

• Anew collective agreement with the Yukon Employees Union:$5.5 million in 2016, according to Public Service Commissionofficials. Expect another $4.3 million in 2017 and $4.4 million in 2018;
• Renovations atthe MacBride Museum: $3 million (Yukon government's portion of a $6 million project);
• Opening 10 new beds at theThomson 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.

Thatadditional spendingmust be taken into account before Silver'sgovernment 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 otherexpenses 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 arecalled "special warrants,"essentiallyadvancesbefore the main budget hasbeen tabled, debated and voted on in the legislature.

• Last gov't left us $8M in the hole, says Yukon premier

They usually happen in early spring, in order to seethe government through to its 'pay-day' the newbudget.

That's exactly what happened last January, when the newgovernment issued a $29.4 million special warrant. The order-in-council said it was neededto 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'sbudget is debated and voted on.

In opposition, Silver castigated the Yukon Party for issuing such warrants. Nowthe 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, soexpect a deficit budget the first since former Yukon Premier Dennis Fentie's last budget in 2010/11.

• Fentie defends spending-heavy budget

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'stotal 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 $126.4million.

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).

• Contaminated mine 'an embarrassment to Canada', says Yukon judge

Another column called "third party recoveries"amounted to $29.3million last year. That includedmoney contributed from the U.S. for the Shakwak highway project.

Then, add in various Yukon tax revenuessuch as personal and corporate income tax, the fuel tax(which is distinct from the gas tax), tobacco tax(tax revenue estimated at $112.3million last year), and then factor in land sales, and a plethora of licences, fees, registrations and permits ($41.4million 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 saidit's "a new day" when it comes to the resurgence of the Yukon's mining sector.

The territorial government's ownoutlook said the economy was bleak in 2015, with the Gross Domestic Product (GDP) down by 3.8 per cent. It saidthe 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.

• Yukon's economic outlook 'bleakest' in Canada, report says

Early expectations for 2017 were much more dire, with the real GDP projected to fall by 5.7 percent.

But hold that thought. Asurge in mineral exploration and spending could yank the Yukon economy back from brink.
And then maybe, just maybe,private sector spending may actuallyfuel the economy.