GNWT slashes funding
Municipalities fret over territorial grant reduction
Yellowknife ( May 29/00) - NWT Tax-based municipalities are scrambling to determine how to deal with territorial grant cuts.
Hay River, Fort Simpson, Yellowknife, Inuvik and Fort Smith will all be affected by MACA's decision to cut 4.73 per cent from municipal block funding. The cuts will take effect in August.
Rumours of cuts circulated in early spring, but the government backed off, although municipal officials expected the reductions would come down with the June territorial budget.
Last week, the communities learned the extent of the cuts.
Now, city and town officials must decide how to reduce costs, either by cancelling projects, increasing service charges or raising mill rates.
The Town of Inuvik has been advised it will lose approximately $65,000 this year. That means it will now receive $735,000 through the MACA agreement.
"We were working on a balanced budget and all of a sudden this money is gone so we're going to have to find the money elsewhere," said Jerry Veltman, Inuvik's director of finance.
He said he is unsure how the funds will be recouped, but that should be discussed within the next two months.
"Either we're going to run at a deficit this year or we're going to have to cut expenses somewhere," Veltman said.
The Town of Hay River will see a reduction of $63,000 from its $735,000 grant.
In addition to that, the town will have 4.73 per cent slashed from its water and sewage services subsidy as well. Hay River will only receive a $566,000 subsidy compared to $594,000 last year.
"We're stuck for the current budget year as our budget is already approved, so these losses will have to be recovered through general revenues," said Terence Courtoreille, Hay River's director of finance.
"And then it probably will result in an inflationary pressure for next year's budget on our mill rate."
The City of Yellowknife will have to axe several capital works projects planned for this year after losing almost a quarter-million dollars in MACA block-funding.
Yellowknife received approximately $5.4 million in 1998, $5.2 million in 1999, and will now receive just over $4.9 million for the current year.
"We're looking at which projects to scale back or cancel," said Robert Charpentier, the city's director of finance.
Since money received from the block-funding is used for capital projects, mainly water and sewer infrastructure replacement and road rehabilitation, Charpentier said those are the projects that will most likely be affected.
He said Yellowknife city officials hope MACA will come to an agreement with tax-based municipalities on long-term block-funding.
"Just so we have some sort of consistency, guarantees I guess, that a three- or four-year block-funding agreement will be in place that won't be cut so that we can plan better," he said.
The slashed funding will have severe consequences for the residents of Yellowknife, according to Mayor Dave Lovell.
Lovell said the city could seek ratepayer permission to borrow money to cover the shortfall and still continue with the work planned.
Fort Simpson will lose $113,283 from this year's budget as a result of block-funding cuts. The village will now receive $2,281,717 from MACA.
In the May 18 edition of the Deh Cho Drum, Mayor Norm Prevost suggested the municipality work with GNWT departments to cut costs.
He cited one example could involve joining forces with the Department of Transportation on a chip-sealing project in August.
Prevost said another option would be to increase the mill rate this year.
During the last council meeting in Fort Simpson, it was agreed the options would be discussed on June 12.