Boasting a second consecutive billion-dollar budget for the territory, Premier Dennis Fentie promised this morning that government spending for this fiscal year "will reverberate throughout the Yukon.”

The premier spoke at the High Country Inn to a breakfast crowd, who paid $25 for bacon, eggs and what the host – Whitehorse Chamber of Commerce – billed as a sneak peek into this year's territorial budget.

And Fentie did not disappoint, revealing millions of dollars in capital and operations expenses to emanate from the $1.07-billion, 2010/2011 budget. The budget he tabled a year ago was $1.003 billion.

"Our fiscal, economic and social policy over the past seven years, has to a large degree been informed through public engagement processes,” said Fentie of what influenced decisions his government made since being elected to power in 2002.

The premier's latest policy tact – to offload debt constructing public works to the Yukon Development Corp. and the Yukon Hospital Corp. – was taken, said Fentie, in order to maintain service levels in the territory and mitigate the burden on taxpayers.

The development corporation intends to borrow more than $50 million to help pay for the $160-million five-megawatt hydro expansion at Mayo and grid linkup between Stewart Crossing and Pelly Crossing.

This project, said Fentie, would reduce future reliance on diesel fuel to produce electricity and ultimately keep the cost of power down.

"We want to avert (the reliance on diesel) so in working with the corporation and doing business like any other corporation out there, borrowing money is part of doing business,” Fentie said

"And in doing so, we're amortizing out over the long term, through the fullness of time, the cost of these projects, so the taxpayer of today is not paying the full cost of something that is still being used years and years out.”

Access to cheap power is important to the mining industry, a sector that loomed large in Fentie's speech because of its investment of "hundreds of millions” in the territory.

"And mining sector developments cannot proceed in the territory without access to energy,” Fentie declared. "So ... we are investing significantly in areas to ensure demand regions of the world are made aware that the Yukon is open for business.”

The premier also defended the government's decision to allow the Yukon Hospital Corp. to borrow $67 million to build a nurses' residence in Whitehorse and two regional hospitals, one in Fentie's riding of Watson Lake and another in Dawson City.

"The demand on our health care system includes the need for more facilities,” said Fentie. "Now we can either build them here in Whitehorse and pay the cost of travel or we can put them out in communities, like Dawson and Watson Lake, and avert that cost of travel.”

But it is the projected cost increases to provide services in the new hospitals that appears to go against the wisdom of a 2008 report on the Yukon's health care spending, which called the rising trend unsustainable.

In January, Craig Tuton, hospital corporation chair, told the Star that operation budgets in the new Watson Lake and Dawson City hospitals would likely be in the $4-million to $4.5-million range. In 2009, it cost $2.2 million to operate Watson Lake's current hospital, while Dawson City's health centre's 2009 bill to government was just $1.3 million.

When asked how his government could justify setting itself up to actually pay more for health care by building the new facilities, Fentie was incredulous of Tuton's projections and said the benefits of the added hospitals were incalculable.

"I don't know where you get doubling and tripling (of costs) but fundamentally, what we're trying to do is be more efficient,” he said.

"How do you attract teachers? How do you attract other professionals? How do you present to the investment community nationally and internationally, that Dawson City and Watson Lake, those regions are a good investments? You have to show and demonstrate that you can provide services that the broader public will need.”

With Ottawa's pledge to maintain the current level of federal transfers to the Yukon, the financial good times here will continue to roll.

Add another $94 million in federal infrastructure stimulus earmarked for the Yukon this year, combined with last year's stimulus dollars, it's no wonder the territory, said Fentie, is a place where "the impacts of the global economic cycle ... have been minimal when we compare ourselves to other jurisdictions.”

As for how long the federal government would ensure the Yukon government's coffers were flush with cash, Fentie could not say.

"There have been no reductions in our territorial funding formula, but I can't speak for what's going to happen in the future as (Ottawa) deals with the (federal) deficit,” Fentie said before taking a veiled shot at the former federal Liberal regime.

"I would remind everyone in the room, the last time the federal government dealt with the deficit in the '90s, they offloaded it to the territorial and provincial governments. I can say today that that's not what's happening.”

Other budget highlights:

• $230 million for Health and Social Services;

• $36 million will be invested in housing for seniors, social housing etc. (a portion of costs to come from $94 million federal stimulus);

• $50 million towards residential and agricultural land development in the Yukon;

• $45 million for improvements to bridges, highways, rural and access roads and airports "to provide mobility to the public and cost containment for industry”;

• $40 million for construction of Yukon College campuses in Pelly Crossing and Dawson City;

• $39 million for type two mine site reclamation;

• $30 million will be invested in water treatment, sewage, heating and waste water treatment;

• new $12 million annual "budget window” for improvements and maintenance of Yukon government buildings;

• $5 million towards forestry sector research and infrastructure;

• $4.4 million for new government equipment and vehicles;

• $3.6 million in municipal infrastructure funding (for rural Yukon);

• $1 million for improvements to emergency communications and cell phone service;

• A "further investment” of $625,000 to the Yukon Film and Sound Commission aimed at creating more exposure to Yukon and attract filming to the territory;

• $500,000 for the Yukon Mine Training Association; and

• $200,000 in additional funding for the Tourism Marketing Fund (now $700,000).