Yellowknife (Mar 22/04) - It'll be tough slogging ahead, particularly for those MLAs new to the legislative assembly, as they delve into the intricacies of a budget that spells potential trouble for the future.

Some areas of the 2004/2005 budget call for substantial cuts -- like 25 per cent to government travel -- but over all, the budget continues a three-year pattern of deficit spending.

Finance Minister Floyd Roland predicted that if the NWT's financial picture doesn't shape up soon, the territory will be $520 million in debt by 2006/2007.

In Thursday's session of the legislative assembly, Sahtu MLA Norman Yakeleya told his colleagues that people in smaller communities don't always understand the need for tax increases, or why Ottawa takes the lion's share in resource revenues.

"How do we educate and help our people get on our side and say that there's a bigger picture here?" asked Yakeleya.

"How do we work it all together?"

For the third straight year, the territorial government will run a deficit budget, albeit down to $45 million from $78 million last year. Total revenue expected for this year is $916 million, but estimated expenditures will rise to $950 million.

NWT residents will see a pay roll tax of 2 per cent in January, up from 1 per cent. The highest income earners will see their personal income tax rates raised: to 12.2 per cent from 11.7 per cent for those earning $68,000 to $108,000; to 14 per cent from 13 per cent for those earning more than that.

Effective Jan. 1, 2004, corporate taxes were raised to 14 per cent from 12 per cent.

Hay River North MLA Paul Delorey said it appears the finance minister's budget address on Tuesday received fair acceptance, but did say people are concerned about the tax increases.

"As soon as you mention taxes, we can do all the explaining we want, but what the people out there see is added costs to the cost of living," said Delorey.

"If it includes any administration (costs) whatsoever, we are doing it for absolutely nothing."

Revenue from personal taxes for 2004/2005 is actually expected to go down by $600,000 to $57,376,000 this year because the increases to high earners will be offset by tax rate decreases to lower income earners.

Yellowknife Centre MLA Robert Hawkins asked the finance minister why other avenues of revenue were not addressed, like sin taxes for alcohol and tobacco.

Roland said those taxes were not raised because the NWT already has the highest sin taxes in the country and they have gone up steadily over the last two years.

During his budget address on Tuesday, Roland said NWT residents will have to shoulder some of the burden for the increased costs to social programs and services.

"We must pay our fair share of the burden," said Roland. "Despite our efforts to reduce expenditure growth, the simple fact remains that we will require additional revenues to respond to our fiscal situation."

The legislative assembly will vote on the budget before the current session ends, March 31.