Days after trade war starts, Yukon gov't issues budget full of asterisks

The Yukon government issued a budget with a projected $82-million surplus Thursday, but both the Eagle Gold mine disaster and Donald Trump's tariffs mean there's still plenty of uncertainty.

First, the numbers: Total spending adds up to $2.36 billion, including $477 million in capital spending and a $75-million contingency fund. Total revenues are nearly $2.2 billion. 

How does that add up to a surplus? The government is including $342 million in accounting adjustments. Add it all up and, according to budget documents, the government is $82 million in the black.

"This budget reflects careful stewardship of public funds, responsible investment in essential services and infrastructure, and a commitment to long-term financial stability so people and businesses can plan for the future," said Finance Minister Sandy Silver during his budget address. 

The budget also includes $774 million in borrowing, bringing the territory's net debt to nearly $696 million. Finance officials say that debt will peak in 2027-28 before starting to fall. That's because the government expects to limit program spending increases to four per cent per year, cut capital spending and enjoy increasing tax revenues thanks to population growth.

This year, at least, there are some major increases in spending. The government is pumping nearly $72 million in new money into the health-care system and is setting aside $1.2 million to plan a major expansion of Whitehorse General Hospital. 

There's $75 million for improvements at the Whitehorse airport, more than $50 million for bridges, especially the completion of the Nisutlin Bay Bridge and $41 million for upgrades to the Alaska and North Klondike highways.

Meanwhile, there's also $12.7 million for a major solar energy project in Watson Lake, $12.4 million for green energy incentives and $12.2 million for various green retrofits.

One major budget item is missing: $45 million in projected spending on a proposed ore dock in Skagway is nowhere to be found. Finance officials say that's because the government has yet to reach an export agreement with the Borough of Skagway.

But another major chunk of cash is required to clean up messes at two failed mines: $118 million for the fallout from the heap leach failure at Eagle Gold mine, and $21.5 million for remediation at the mothballed Minto mine.

The budget features no new taxes, apart from an increase in tobacco taxes to match inflation that took effect on Jan. 1.

Tariff trepidation

But finance officials warn that the imposition of tariffs — some of which were again paused by Trump just before Silver tabled the budget — mean there's a huge cloud of uncertainty hanging over the budget's projections.

In fact, finance department staff took the unusual step of including a supplementary document laying out the ways the trade war could upend the government's fiscal plans. 

The good news is that just four per cent of the Yukon's exports go to the United States, by far the lowest share in the country. And virtually all of that four per cent comes from the Keno Hill silver mine, which is partially insulated from tariff shocks by recent spikes in silver prices. 

The bad news is that the tariffs are widely expected to drive up inflation, both for consumers and businesses, which are heavily reliant on equipment imports from the States. Officials warn the tourism sector, which has rebounded well from the pandemic-era crash, could also be upended. 

'Never been this poor,' says opposition leader

Speaking to reporters after the budget was tabled on Thursday, Official Opposition Leader Currie Dixon blasted the government for what he called "the worst public finances this territory has ever had."

Dixon took aim at the territory's level of debt and borrowing, saying he was "blown away" by the level of debt being incurred.

"I knew that we were in a bad fiscal position, I knew that we're facing difficult times — but I had no idea it was this bad, and I had no idea that the government was going to go this far when it comes to borrowing," Dixon said.

"We have never been this poor and we've never been this weak economically."

Dixon also complained that growth in the public sector has outpaced any growth in the private sector. He called for a "slowdown" in government hiring.

"The size of the public service needs to be reined in," he said.

NDP Leader Kate White characterized the budget as "dull and dreary," saying she doesn't see much to get excited about.

"Budgets are about priorities and it's about like, it's envisioning the future. And yeah, I'm not leaving that budget address very inspired," she said.

The NDP has helped prop up the minority Liberal government with a Confidence and Supply Agreement over the last few years, but White was cagey about whether her party would support the budget again this time around.

"Can't tell you now where I'm going to go," White told reporters. "I can tell you I'm frustrated, but it's day one so let's see where I'm at on day 32."