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Last week, Mayor Gord Van Tighem and some city councillors expressed concern the federal government's proposal to rebate the Goods and Services Tax to Canadian municipalities may give the territorial government an excuse to clawback capital funds to the city.
But Handley said the GST rebate is a matter between municipalities and the federal government.
"It would be terribly counterproductive (to clawback)," said Handley.
"The federal government wants to give municipalities a break on the GST and that's fine. We're not going to claw it back."
As of last week, at least one provincial government is considering going after the capital funds if the federal plan moves forward.
New Brunswick's finance minister, Jeannot Volpe, said the province may have to do so to combat its projected deficit of $300 million.
Handley said no one in cabinet has proposed making such a move, but he'd be against it if it did come up.
"I'd certainly argue with my colleagues that no way would we claw that back," said Handley.
This year's contribution from the GNWT to Yellowknife is expected to ring in at $7,321,000.
Mayor Gord Van Tighem, who had earlier predicted the City of Yellowknife would save $250,000 if the federal government came through with the rebate, now says the amount is more like $500,000.
He said he was happy to hear Handley is not keen to pilfer the windfall.
"That's good. Council will be bringing forward a resolution, probably next week encouraging the federal government to move forward with this expeditiously," said Van Tighem.
He said it's still possible the city may scrap this year's 0.7 per cent property tax increase as a result of the GST rebate.
As for the $16 million in Municipal Rural Infrastructure funding announced for the NWT by Minister of State, Andy Scott, last week, Handley said the territorial government hasn't decided what to do with that yet.
