Yukon surplus masks rising debt, heavy reliance on Ottawa

Yukon surplus masks rising debt, heavy reliance on Ottawa

Published 4:30 pm Wednesday, February 18, 2026

The Yukon’s finances received a clean bill of health from the Auditor General of Canada, but the territory’s long‑term fiscal outlook is tightening as debt rises, net financial assets fall, and federal transfers continue to dominate revenues, the Standing Committee on Public Accounts heard on Feb. 17, 2026.

Deputy finance minister Katherine White said the government ended the 2024–25 fiscal year with a $175‑million surplus, but with rising liabilities and reduced fiscal room.

Finance officials told the committee that financial liabilities increased by $230.3 million in 2024–25, outpacing the $199.1‑million rise in financial assets and pushing Yukon’s net debt up by $31.2 million. They said the shift continues a multi‑year decline in net financial assets.

The largest liability increases in 2024–25 came from bank advances and short‑term borrowing, which rose by $162.4 million. The government also recorded a new $55‑million surety bond tied to Victoria Gold’s Eagle mine, along with $17.9 million in higher accounts payable and accrued liabilities, including $17.6 million owed to businesses for carbon price rebates.

On the asset side, the government reported a $105‑million loan receivable to Victoria Gold, a $52.6‑million increase in accounts receivable, and a $28.6‑million rise in amounts due from Canada in 2024–25. Cash and cash equivalents increased by $10.9 million.

White said the territory’s fiscal position was also affected by a one‑time $54‑million gain from the national tobacco settlement in 2024–25. The Yukon received $25.4 million upfront in August and September 2025, with the remainder to arrive through annual installments tied to tobacco companies’ net after‑tax income.

After $3.3 million in legal fees, the settlement increased the 2024–25 financial surplus by about $50.7 million. White said the money is non‑recurring and recorded as general revenue, noting the Yukon has spent far more on tobacco‑related health costs than the settlement amount.

MLAs also heard that Yukon’s reliance on federal funding remains a defining feature of its finances. Over the past 10 fiscal years, federal transfers have averaged about 83 per cent of total revenue. Using the 2025–26 supplementary estimates, the committee heard roughly 85 per cent of forecast revenue for that fiscal year will come from Ottawa.

Total revenue for 2025–26 is projected at $2.185 billion, including $1.538 billion in grants and transfers and $312 million in federal recoveries. Yukon comptroller Marcel Holder Robinson said the territory’s small tax base limits its ability to raise its own revenue, leaving it inherently vulnerable to federal policy changes.

White and Robinson said the federal framework is stable and predictable, but acknowledged the Yukon’s dependence on Ottawa shapes aspects of its fiscal planning.

Borrowing pressures also drew scrutiny. Ottawa raised Yukon’s debt cap from $800 million to $1.2 billion in December 2024, but as of March 31, 2025, the territory had already used $589.7 million, just over 49 per cent of the limit.

Roughly 73 per cent of the debt cap is expected to be used by March 31, 2026, White told the committee.

The Auditor General explained to the committee that the Public Accounts flag significant exposure tied to Victoria Gold, including the $105‑million loan receivable and the $55‑million surety bond that shaped the 2024–25 discussion of net debt and financial assets. Audit project leader Christine Coons said these items carry some of the highest risks of material misstatement.

Coons said the Victoria Gold items involve “complex and subjective” estimates that may change as new information emerges.

White noted that the Yukon holds an AA credit rating from Standard & Poor’s, saying it shows the territory has a strong ability to meet its financial obligations. She said the rating also helps attract buyers for Yukon bonds, which keeps borrowing costs lower.

The Department of Finance is also preparing for major changes to public‑sector accounting rules when a new standard takes effect for fiscal years beginning on or after April 1, 2026. White said the shift will require system updates, restated comparisons, and training for departments and MLAs.

Contact Jake Howarth at jake.howarth@yukon-news.com