The Hamlet of Cambridge Bay is budgeting $146,000 to operate the shelter this year, $61,000 more than funding provided by the territorial government.
And Peterson said the shelter is already $64,000 in the hole.
"Our wellness people are upset we might have to close it if we don't get the money," he said.
Closing the centre would be disastrous.
During 10 months last year, 116 women and children were housed in the shelter.
According to RCMP Cpl. Chris Boardman, there were 56 reported spousal assaults in the community of 1,500 people during 2002.
That is nearly double the number of cases from 2001.
"We do have a high number of spousal assaults," said Boardman, who called the crisis shelter a valuable resource.
"Once you take people into a crisis shelter, you have to provide services 24 hours a day, seven days a week," said Peterson.
He said the hamlet plans to continue operating the shelter until the money runs out. From that point, it will be up to the territory to put up the funds needed to keep the facility open.
The centre has one paid staff member, a family violence co-ordinator, and relies heavily on volunteers.
"Violence is a big problem in Nunavut, but we don't have the proper funding or programs to deal with it," said Peterson.
"We're one of the only communities that has a facility and it's a converted three-bedroom house."
Community Wellness director Pauline Plamondon said as much as they can't afford to operate the shelter they also can't afford to close it.
"Statistics each year tell us there are a lot of spousal and sexual assaults and these are concerns we have been working on for a long time," she said.
"It's really sad because every year our clientele goes up."
Plamondon said if the hamlet lost its shelter they would lose the opportunity to help people in situations where there is rarely a second chance.
"It takes a lot of courage to call and ask for help. Women usually don't call for help and if we weren't able to answer when they did, they would never again reach out," she said.
A high number of domestic assaults is not unique to Cambridge Bay.
Cpl. Warren Gauchier with the RCMP in Taloyoak said many of the complaints they respond to are domestic abuse.
On average, RCMP in the hamlet of 750 residents, receive three or four domestic complaints a month.