Time to tighten the belt
Pangnirtung develops recovery plan with help of government
Myles Dolphin
Northern News Services
Published Monday, December 9, 2013
PANNIQTUUQ/PANGNIRTUNG
The hamlet of Pangnirtung will be tightening its belt for the foreseeable future while it implements a deficit recovery plan it developed with the help of the department of Community and Government Services.
The plan, also known as a deficit recovery budget, was put into place following the recent announcement the hamlet had accumulated a $1.5-million deficit.
Ed Murphy, interim senior administrative officer of Pangnirtung, said the hamlet has already begun implementing the long-term plan.
"We've laid some people off already, and that is one of the indicators that we're implementing the plan," he said, referring to five hamlet employees who lost their jobs in November.
"The plan is a detailed view of hamlet expenses. You look at that and see where your revenue streams are, and where your expenses are and you bring them in alignment."
The Department of Community and Government Services (CGS) provides block funding to hamlets and in instances where the hamlet has an overall deficit, they may request assistance from the department to develop a recovery plan.
Darren Flynn, CGS assistant deputy minister of community support services, said the department can only act as consultants to the hamlets, which are autonomous levels of government.
"The department has never bailed out a deficit," he said. "Once a municipality gets itself into a deficit as a result of overspending, we work with them to develop a plan.
"There wouldn't be any additional dollars going in, revenue wise. We look at ways to reduce expenditures in order to reduce deficit."
Pangnirtung's deficit, which accumulated over a long period of time, represents nearly 19 per cent of its annual revenue of $8 million.
The hamlet has been without key administrative employees since October, when former mayor Sakiasie Sowdlooapik and deputy mayor Johnny Mike went on leave to run in the territorial election and former SAO Ron Mongeau left the community under unknown circumstances.
Flynn said under the Hamlets Act, there is a requirement for municipalities who have incurred a deficit to recover those funds by the close of the fiscal year.
"In Pangnirtung, obviously they can't recover $1.5 million in one fell swoop or within a year," he said.
"Here we're looking at a three- to five-year reduction plan. Once it has been approved by the department, there is a time order variation issued by the minister to allow the hamlet more time to pay it off and remain compliant with legislation."
The current plan will allow the hamlet to reduce its deficit by three to five per cent per year.
Flynn said these requests to CGS don't happen nearly as often as they used to, when he first joined the department in 2002.
"The communities are in better financial health now," he said.
"Revenue is generally not an issue, it's generally an expenditure problem. It really is like the old adage: it's not what you make but what you save."
He added "a few other" communities had approached CGS about assisting them in developing deficit recovery plans, but he preferred not to name them.
