When he pulled the veil completely off the 2004-05 budget, Premier Dennis Fentie revealed a record of $705.8 million in spending.

The budget, announced this afternoon by Fentie in his role as Finance minister, is the largest in the territory's history.

The budget sees records for both capital spending ($162.7 million) and in operations and maintenance ($543.1 million).

The operation and maintenance increase is in part due to the addition of 240 new jobs through last year's devolution transfer of natural resource control from Ottawa to the Yukon.

Devolution brought the total operation and maintenance spending for 03-04 up to $523 million from $461.7 million in 02-03.

This year, the budget for operating the government has jumped another $20 million.

Included in that $20 million is an additional $4 million to $5 million for salary increases as a result of new contracts with most of the government's employees, Department of Finance officials indicated in a budget briefing today.

Early in his speech, Fentie mentioned there are no tax increases in this budget.

In fact, there will be a decrease for all incorporated Yukon businesses.

For the first $250,000 in net income for all Yukon corporations, the companies currently pay six per cent in income tax to the territory.

As of Jan. 1, 2005, the government will now charge four per cent in income tax on the first $250,000. After $250,000, the rate is 15 per cent; that has not changed.

The tax cut will cost the government $760,000 per year.

The government is also increasing its child benefit, as well as the income ranges for Yukon families to receive the bonus.

Currently, each eligible family receives $300 per child a year from the territorial government.

That is now going up to $450 per child each year.

More families will be able to take advantage of that benefit as well, with an increase to the ranges.

Currently, a family with one child and an annual income of less than $30,000 is eligible. For each child, the allowable income increases. For a family with five children, they are eligible to the benefit if they make less than $50,000 in a year.

Under the new levels, a family with one child can receive the benefit as long as they make less than $45,000. For the five-child family, the family must make less than $70,000 now, to receive the benefit.

The government is also promising to extend its Yukon Mineral Tax Credit another three years to help exploration in the territory.

This is the first budget under the new full accrual accounting method the government announced last November it would adopt.

The new system does not count all of the money for new projects in the year the cash is spent. Instead, the cost is spread out over the expected life of the project, which can be 20 or 30 years.

This spreading out of costs and the calculation of the value of all of the government's assets including buildings and roads, means a substantially larger accumulated surplus for the premier to play with.

Last October, a supplementary budget issued by Fentie estimated the surplus by March 31, 2004 would be $61 million.

Now, under the new system, the surplus Fentie is predicting is $371.9 million.

If the Yukon government had switched to the new method last year, the accumulated surplus would have been $396.5 million at the end of 2003-04 and $403.4 million at the completion of the 2002-03 year.

In a controversial move last fall, Fentie changed the Taxpayer Protection Act so that a government could not be forced to call an election unless the new, much larger surplus, dropped below zero into an accumulated deficit.

However, if Fentie left the Taxpayer Protection Act as is, which is what the opposition and former Yukon Party leader John Ostashek suggested, he still would not be forced to call an election this year.

The estimated surplus at the end of the year on March 31, 2005, using the old method, would be approximately $17 million.

However, another year with the same annual deficit built into this fiscal budget would put the Yukon into accumulated deficit using the old system but not the new.

With the new method of calculation, which factors in the costs of capital assets and the amortization, the deficit for 2004-05 actually drops to $31.48 million.

The government is estimating it will draw in $647.6 million in revenue.

Of the revenue, 72.3 per cent will come from the federal government through $468.78 million in transfer payments.

The government itself will generate 12.1 per cent of that revenue, mainly through taxes, liquor sales, fees and licences.

The government expects to recover another $85.4 million from various programs, including some from Ottawa.

The amortization of certain capital contributions equals $15.2 million.

As for the changes in operation and maintenance spending, the department with the biggest increase is the Department of Economic Development, which was just recreated in last year's budget.

Economic Development's budget is going up 117 per cent from $2.9 million to $6.28 million.

The other departments which will see increases are:

• Elections Office 54 per cent to $214,000;

• Executive Council Office nine per cent to $19 million;

• Education ó, five per cent to $99.9 million;

• Energy, Mines and Resources 10 per cent to $31.95 million;

• Environment five per cent to $18.7 million;

• Health and Social Services five per cent to $161.2 million;

• Highways and Public Works two per cent to $72.5 million;

• Justice three per cent to $36.7 million;

• Tourism and Culture two per cent to $13.5 million;

• Yukon Legislative Assembly ó, two per cent to $3.9 million;

• Women's Directorate 14 per cent to $626,000.

The biggest drop in the operation and maintenance spending is in the Public Service Commission, which will see a cut of 11 per cent down to $15.1 million from $16.95 million.

Other departments with drops in operation and maintenance spending are:

• Community Services three per cent down to $45.53 million;

• Finance five per cent down to $4.78 million;

• Yukon Housing Corp. down to $12.68 million from $12.71 million.

Department officials noted the Yukon government is legally permitted to incur $138 million in debt.

As of now, it has $84 million of debt. Of that debt: $42 million relates to Yukon Energy Corp.; another $15 million comes from what is owed to the Immigrant Investor Fund; $19 million is owed by Yukon Housing Corp.; while the territorial government itself owes $4 million in debt.