The Yukon Liberals delivered their first budget as the new government this afternoon.

At $1.44 billion, it’s the largest in Yukon history. The last fiscal year’s budget was worth $1.39 billion.

“Our government presents a 2017-18 budget today that is clear and measured,” Premier Sandy Silver said in a lengthy address to the legislature.

Of the money allotted for the 2017-18 fiscal year, $309 million will be spent on capital projects, and $1.14 billion will go toward operations and management (O&M).

About $1.1 billion (77 per cent) of the territorial budget comes from Ottawa, up from last year’s $946 million.

This includes annual federal transfers, such as territorial formula financing, health and social transfers, and recoveries, which include federal money for child welfare, type II mine sites and money for infrastructure, land claims implementation and French language services.  

The government is expecting a modest surplus of $6.5 million this year, but forecasts major deficits in the years to come.

If the government keeps on its current spending path, it will run an estimated $49-million deficit in 2018-19, a $58-million deficit in 2019-20 and a $42-million deficit in 2020-21.

With new capital assets, such as the Whistle Bend continuing care facility and the new francophone high school, yearly O&M costs will increase.

O&M costs include wages, the delivery of government service, and the day-to-day costs of running government-owned buildings and offices.

Previous territorial budgets didn’t fully account for long-term O&M spending on new, large assets, Silver told the legislature this afternoon.

“Planning that more prosperous future means re-considering our current path,” said Silver.

For this reason, the government is establishing a financial advisory panel to help move the territory toward financial sustainability and steer it clear of needing to borrow money in future years.

The panel will consult with the business community, First Nation and municipal governments. It will begin this work in June and submit initial recommendations by October.

The Liberals promised to eliminate the small business tax and reduce the general corporate rate from 15 per cent to 12 per cent.

It kept the latter promise but broke the first. Rather than get rid of the small business tax altogether, the government is cutting it from three per cent to two per cent.

As a result of these tax cuts, corporate tax revenue is anticipated to drop by $2 million this fiscal year.

The government is expecting to recoup some of those losses through an increase in the tobacco tax.

The tax on one cigarette or one gram of tobacco is set to rise from 21 cents to 25 cents on July 1, and go up again from 25 cents to 30 cents on April 1, 2018.

The tobacco tax increase is expected bring in $1.1 million this fiscal year.

Additionally, revenues from personal income taxes are expected to rise with cuts to the corporate tax rate. The personal income tax rate is not changing, but as corporate taxes are directed to additional profits for shareholders, the amount of personal tax individual shareholders will pay is expected to increase.

The government is anticipating an additional $400,000 from personal income taxes this year, and $1.6 million in the 2018-19 fiscal year.

In total, the government estimates it will generate about $110.6 million in revenue through territorial taxes, such as the personal income tax, corporate income tax and the liquor and tobacco taxes in 2017-18.

Money from other sources, such as liquor sales, motor vehicle and business licensing fees, the sale of land and fines, is estimated to bring in $39 million this year.

The Yukon has an an estimated $9.5 million in net financial assets, that is, money in the bank. That’s down from the $93-million it was estimated to have at the beginning of the year.

Last year the Yukon Party government projected a $9.4-million surplus, but ended up with an estimated $8.2-million deficit for the previous 2016-17 fiscal year.

The surplus was eaten up by a $7.2 million collective agreement with the Yukon Employees’ Union, additional beds at the Thomson Centre, and by the Yukon Hospital Corp. and Yukon College pension solvency deficits.

There is no money in this year’s budget from the impending carbon tax, as details about how the tax will work have yet to come down from Ottawa.

Under the operation and maintenance budget for 2017-18, estimates for the largest department budgets and how they compare to last year’s estimates are as follows:

• Health and Social Services - $363.6 million, up from last year’s $348.4 million;

• Education - $176.3 million, up from last year’s $163.7 million;

• Highways and Public Works - $137.2 million, up from last year's $127 million;

• Community Services - $89.4 million, up from last year’s $87.6 million;

• Energy, Mines and Resources - $74.9 million, down from last year’s $78.5 million;

• Justice - $70.2 million, up from last year’s $68 million;

• Public Service Commission - $48.9 million, up from last year’s $46 million;

• Environment - $40.8 million, up from last year’s $36 million;

• Tourism and Culture - $27.8 million, up from last year’s $25.7 million;

• Executive Council Office - $24.2 million, down from last year’s $26.3 million.

See further coverage in Friday’s edition.