Yellowknife (Mar 19/04) - If anything could be said about Floyd Roland's first budget address as finance minister, it wouldn't be that this is a government looking to slash and burn the amount it spends.

For the third straight year, the territorial government delivered a deficit budget last Wednesday -- one ruled by, as Roland put it, "forced growth," because of ballooning government wages and an overheated economy.

While this year's estimated deficit is down to $45 million from $78 million last year, Roland warned his legislative assembly colleagues the NWT's overall debt is due to skyrocket past the $300 million debt wall in 2006/2007 to $520 million.

At a news conference held the morning before his budget address, Roland told reporters the territorial government will ask Ottawa this year to increase its borrowing limit to create some breathing room on infrastructure spending.

"We are looking to go higher than $300 million," said Roland.

"It could be $400 million, it could be higher. How much really depends on what criteria the assembly is willing to except."

Roland said the huge debt forecasted two years from now -- up from $144 million for 2005/2006 -- is due in large part to overpayments made on corporate taxes through the federal formula funding agreement, which the GNWT will have to pay Ottawa back that year.

The remainder is mainly debt incurred through the NWT Power and Housing Corporations over several years.

As expected, the minister unveiled a number of tax increases into the 2004/2005 budget.

The corporate tax rate was raised to 14 per cent from 12 per cent.

Effective July 1, personal income taxes for those earning $108,101 or more will be 14 per cent, up from 13 per cent, and those earning between $66,492 and $108,100 will see their tax rate jump to 12.2 per cent from 11.7 per cent.

In January, the government plans to increase the payroll tax to two per cent of employment income, up from one per cent. Roland said the tax increases are a necessary demonstration to the rest of the country that the NWT is ready to pull its own weight.

"We've come to a crossroads where we have to start taking action from within to show Canadians that we are carrying our fair share of the burden," said Roland.

"We're not seen as making the target of our revenue initiatives."

Relief for lower bracket

NWT residents with lower incomes, however, will see their income tax rates reduced -- down to 5.9 per cent from 7.2 for the lowest bracket and down to 8.8 per cent from 9.9 for the second lowest bracket.

It's traditional for a finance minister to have new shoes on Budget Day. Finance Minister Floyd Roland sported a pair of moccasins made by Gwich'in elder Elizabeth Greenland that were a 17-year-old wedding gift from Roland's sister. - Chris Woodall/NNSL photo

The Cost of Living tax credit will also increase by one per cent to 2.6 per cent.

Overall, this year's budget forecasts revenues in excess of $916 million, up by $59 million from last year.

Operational expenses, however, are expected to total more than $950 million.

If approved by the legislative assembly, half the government departments will see modest increases in their respective budgets, while others will see only slight decreases in funding.

Big ticket items include $42 million over five years in matching funds with the federal government to build roads and bridges.

As well, $2.4 million has been allocated for beefing up RCMP presence in the NWT and $1.5 million has been earmarked for the Aboriginal Pipeline Group to help it obtain one-third ownership of the Mackenzie Valley Pipeline.

Other such items include $9.3 million for building and upgrading schools; $9.5 million for improving water and sewer systems; and $5.2 million for improving hospital and health care facilities.

Roland said despite the territory's financial challenges, the government has an obligation to its residents to ensure programs and services are maintained. "As a government we have to go forward and see how we can ensure residents feel their dollars are being spent in the best way possible," said Roland.

"If a debt is going to be incurred, we want to make sure it's for the right reasons."