When Yukon Premier Currie Dixon tabled his government’s first full budget on Thursday, he put it bluntly: the territory is spending more than it can afford, leaving it in a “dangerous financial position.” 

The budget projects a nearly $82-million deficit, which Dixon called a new record for the territory. The territory is also approaching its borrowing limit from the federal government, the premier said.

The tabling of the budget marked the start of the spring sitting for the territory’s 21 MLAs.

Dixon referred to “unsustainable spending” by the former governing Liberals, including under the confidence-and-supply deal with the NDP, which he said came at the expense of health-care and energy infrastructure.

“It is much worse than was ever publicly communicated to Yukoners,” Dixon said in his budget address. “Nine years of reluctance to make tough decisions and prioritize means that the Yukon faces significant deficits in infrastructure and programming.”

Dixon has described the budget process as constrained by the debt cap imposed by Ottawa, which now sits at $1.2 billion. The territory is requesting that cap be raised.

In total, the territorial government is putting forward a $2.46-billion budget for 2026-27, subject to legislative approval. That includes $2.07 billion in operations and maintenance spending, and $385 million in capital expenditures.

While many jurisdictions in Canada have been hit hard by U.S. tariffs, Yukon has fared better than other places, the government says. 

The government’s economic outlook predicts modest growth with strong metal prices and higher placer gold production. 

New contingency fund

The budget proposes a new $100-million contingency fund to cover unexpected spending such as wildfire costs.

Officials said this would be similar to what other jurisdictions already have in place, as the Yukon catches up.

The difference from a previous, $75-million contingency fund is that the territorial government won’t need to return to the legislative assembly prior to dipping into the new fund, if changes to the Financial Administration Act are approved. Government officials said that will help the territory move away from the historic use of special warrants and supplementary budgets. 

Territorial government borrowing is anticipated to close in on the $1.2-billion limit imposed by Canada, if that full contingency fund is used. The rising debt is needed to pay for repairs and building of energy infrastructure, the government says.

The government’s net debt position is expected to further deteriorate from $696 million to $804 million over the year but could improve by 2028-29, according to budget documents.

Health spending goes up

Capital spending is down from the last territorial budget, as major projects such as the Nisutlin Bay Bridge replacement project and Whitehorse international airport runway construction start to wind down. 

Growth in the departments of Health and Social Services, Education and Justice drove operations and maintenance spending up.

The biggest chunk of spending will go to health, with money earmarked for a long term care home in Watson Lake, and an expansion of Whitehorse’s Whistle Bend Place. There is also an increase in the budget for the Whitehorse General Hospital expansion project.

The departments of Energy, Mines and Resources and Highways and Public Works will see cuts to their budgets this year.