Opposition parties have slammed Premier and Finance Minister Dennis Fentie's $1.075-billion budget and Liberal Leader Arthur Mitchell believes the latest spending estimates are so unrealistic that the premier will go to the polls before leveling with Yukoners that the government is broke.

"I would be very surprised if we see the next budget before we had a general election. I don't think (Fentie's) going to want ... to table a supplementary budget a year from today that'll show the deficit again this year and the inability to carry forward spending at this pace,” Mitchell told the Star shortly after the premier wrapped up his budget speech in the legislative assembly Thursday afternoon.

"The longer that you deal with an unrealistic approach, the worse the medicine has to be at the end, and there's no need for this.”

After projecting a near $20-million surplus for last year's bottom line, Finance officials now report a $23-million deficit.

Based on the government's spending estimates by departments for 2010/2011, most of which show marginal increases – except Health and Social Services, which gets $18 million less than the true cost of delivering services for last year – Mitchell rejected the government's $2.9-million surplus projection.

"I don't believe in this surplus for this year at all. Why should I? He promised us a $20-million surplus last year and he didn't deliver it,” Mitchell said. "Departments have been told to slash and burn their estimates so they could bring in a line that was slightly positive.

"It's just a game, basically. Mr. Fentie wanted a starting point that didn't show the bad news, and it still shows.”

Finance officials blamed the Territorial Health Access Funding (worth approximately $6 million annually and only recently renewed in the Mar. 4 federal budget), for the modest $230-million Health spending estimate – less than a $1 million increase over last year's projections – yet, the trend applies to many departments.

Spending for Community Services' ($65.8 million) is slashed by nearly $1 million compared to last year and Economic Development is slated to receive $13.9 million, $3 million less than what it actually cost to run the department in 2009/2010.

A similar scenario faces the Department of Environment, budgeted to receive $27 million – more than $1 million less than than it cost to run the department last year.

Meanwhile, Education, faced with the challenge of improving its graduation rates, receives $129.5 million, just $2 million more than last year.

And the only government department that sees a significant boost, thanks to a $39-million federal investment to clean up abandoned mine sites – is Energy, Mines and Resources.

Inevitable salary increases for members of the Yukon Teachers' Association and Yukon Employees Union – both negotiating new collective agreements – are not factored into this budget, said Mitchell, and another health emergency like last year's H1N1 scare would push the government's books well into the red.

"It used to be that Mr. Fentie went with, ‘Imagine the future.' Now it's just plain he's having rampant imaginations,” Mitchell said. "He's just not operating in reality.”

While the leader of the official Opposition labelled the budget a "go for broke” formula, NDP house leader Steve Cardiff said the premier is steering the Yukon to the financial brink – and revelling in it.

"A lot of what the premier was doing yesterday was boasting,” is how Cardiff described Fentie's budget speech. "It wasn't about delivering a budget, but boasting about actions of his government.”

The MLA for Mount Lorne pointed to the territory's dwindling net financial resources, also referred to as cash-on-hand, which has dropped from $135 million to $40 million in less than two years.

This decline has forced Fentie to offload public works spending on to the backs of Crown corporations, Cardiff told the Star.

"Here we are we're encouraging our corporations to borrow more than $100 million ... and I understand concept of paying for things over time, but the reality is if we continue going the way we're going we're going to end up in a situation that we won't be able to service the debt,” he said.

"If the Yukon Hospital Corporation (YHC) and Yukon Development Corporation (YDC) aren't able to make payments on the debt they incur, ultimately the taxpayers are going to have to bail them out.”

Already the hospital corporation has taken a loan for $17 million to pay for a new nurses' residence beside Whitehorse General Hospital, and the corporation plans to leverage another $50 million from the bank to build two regional hospitals – one in Watson Lake and another in Dawson City.

And once the hospitals are built, the cost of delivering health care services in those communities is expected to double, according to YHC chair Craig Tuton.

In January, Tuton told the Star that operation budgets for each of 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.

Cardiff said when massive amounts of stimulus cash from Ottawa stops as the federal government tries to shore up its own deficit, he expects the premier to start slashing

wages and services.

"We see Mr. Fentie taking credit for that ... but (Ottawa) is signaling that federal government departments are going to have to tighten their belts,” Cardiff said. "And the Yukon will have to follow suit and the only way you can do that is reduce programs and services or freeze or cut salaries.”

In the worst-case scenario, the Yukon would have to do what New Brunswick has already done and the Ontario provincial department is currently considering: selling off Crown assets.

"The Conservatives are the ones who've done this over and over again. They run up deficits by spending big then use that as justification for making cuts to services and jobs, or selling off infrastructure,” Cardiff said.

"And these guys aren't far behind. We've already had concerns of the government selling off electrical assets.”

Last June, half the Yukon Development Corporation's board resigned. The four outgoing directors charged Fentie with attempting to liquidate the territory's energy assets for a rock-bottom price to Calgary-based energy giant ATCO.

It was a scandal that rocked Fentie's Yukon Party government, cost the premier a cabinet minister, and still dogs the premier to this day.

Despite making assurances that a selloff or privatization deal with ATCO's subsidiary, Yukon Electrical Co. Ltd., is off the table, many believe Fentie is proceeding with such negotiations.

Addressing the harsh criticism of his budget by opposition parties, Fentie defended the fiscal plan as "prudent,” adding all the projections are fiscally sound.

"It's not me saying that we'll have a $2.9-million surplus; it's the government's accounting of its fiscal position,” Fentie told the Star on Thursday afternoon. "We set targets. It's called prudent fiscal management.”

The $23-million deficit for this fiscal year, Fentie explained, "is to a large degree not the expenditure of cash but a change in some elements of accounting.”

"It's a complex system that determines outcomes here and we can't ignore all the elements of that.”

The premier also rejected that wages or employment with the government would be reduced.

"We are not into a situation where there are any hiring freezes at all,” Fentie said, adding that factoring wage increases to come on the heels of negotiations with the teachers' and employees' unions is a fool's game.

"It would be imprudent to preclude the process by allocating a dollar value to a collective bargaining agreement. Standard procedure is to wait until that is concluded.”

The good news from this year's budget is Yukoners will face no new tax increases nor health care premiums, the latter of which a spectre that opposition leaders warned cold become a reality.