Yellowknife (Apr 14/06) - Premier Joe Handley is all smiles after a report on federal financing was unveiled Tuesday, recommending resource royalties and more money for the territories.

He expects a new formula funding agreement with Ottawa is just around the corner.

I'm very optimistic that we got everything we need here to make a good deal. - Premier Handley

"It all looks very encouraging," said Handley from Ottawa on Wednesday.

"I'm very optimistic that we got everything we need here to make a good deal."

Formula funding has been a sore point ever since the federal government slashed base funding to the NWT in 1995 to pay down its debt.

The territorial government currently collects about $750 million a year from Ottawa to pay for programs and services.

Tuesday's announcement from the advisory panel of the Council of Federation - a body of academics and former politicians, including former NWT finance minister John Todd - recommends the federal government boost yearly funding to the NWT by $90 million.

A chapter in their report - dedicated entirely to the three territories - also calls on Ottawa to "expedite negotiations to conclude agreements where territories assume province-like authority and responsibility for management of lands and natural resources."

Handley said he takes this recommendation as a green light for the NWT to take the lion's share of royalties from resource royalties.

The federal government took in $278 million in resource royalties in 2004, and Handley expects that amount will continue to grow.

"When the Mackenzie Valley pipeline comes along some day, that's going to be much, much bigger," said Handley .

"So we'll have an opportunity then to talk about major infrastructure development, a heritage fund and a deal with aboriginal governments."

An expert panel working on behalf of the federal government is also working on a report on formula financing to the provinces and territories.

Handley expects that report to draw similar conclusions to those made by the Federation panel when it comes forward in late May or early June.

That, on top of pledges made by Prime Minister Stephen Harper to fix the fiscal imbalance, has the premier hoping a new financing agreement will be reached in time for the 2007 territorial budget.

"Everybody is saying the same thing here, including the prime minister," said Handley.

"We've got everybody in an agreement, now we just got to talk about quantities."