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ARVIAT - A recent audit shows the municipality of Arviat has seen its operations deficit soar during the past fiscal year.

The audit, conducted by K. R. Manson, shows Arviat with a $833,310 deficit in general operations.

Arviat's deficit in the previous year was $436,480.

Community and Government Services (C&GS) director of community development Darren Flynn said C&GS will be meeting with Arviat council members and their administration to address the matter within the month.

He said the deficit results from overspending and a recent contract negotiated with the union.

"With reserve deposits, money in land development, and a surplus in water and sewer, the bottom line shows an overall net surplus of $280,000, but that's a fictitious way of looking at it," said Flynn.

"Those funds are restricted for their specific use, so they can't be used in the general operating fund."

Flynn said a major portion of Arviat's deficit is the result of a newly-negotiated union contract.

He said the hamlet has a considerable increase in wages since the previous year.

"There's no doubt the new union contract is a major contributor to the increase in Arviat's deficit.

"There's a big increase in the cost of the hamlet's labour, with some positions receiving a 40 per cent increase in the rate paid.

"Those pay hikes compound in that the employer's portion of EI premiums goes up, as does the eight per cent the employer pays into the pension plan."

Flynn said C&GS will work with the hamlet of Arviat to quickly put a deficit-recovery program in place.

He said all areas of expenditure will be reviewed.

"You have what you have for funding.

"So if you pay more out in wages, you have to take that from somewhere else in your budget.

"We'll be looking at every option, including wages."

Flynn said a number of Nunavut hamlets have recovered from substantial deficits similar to Arviat's.

He said each hamlet is unique in how it gets into a deficit situation.

"To recover, it comes down to a budgetary process where once you set your targets you have to stick to them.

"We're not going to come to the table with a magic solution to this problem.

"Communities are adequately funded to cover expenses and we don't put new money into deficit hamlets.

"We'll put in a lot of resources to provide assistance, but we won't put in additional funding to cover up for past spending mistakes."