by Glenn Taylor
Northern News Services

INUVIK (Sep 05/97) - Inuvik is deep in debt, and spending has been frozen until a way can be found out of the rising pool of red ink.

The town's finances are caught between a rock and hard place. On one hand, cost overruns to the new arena have added nearly $400,000 to the town's already burdensome debt load. Add to that some $560,000 in unpaid taxes owed by businesses and residents.

Those unpaid bills "are operational dollars that we don't have, so we are forced to borrow money to carry off (the budget)," said Don Howden, the town's senior administrative officer.

The operating budget was blown last month when council learned the recreation complex budget had been exceeded by some $385,000. That number has grown again, to about $400,000, according to Mayor George Roach. Council had no choice but to approve a $385,000 loan to cover the overage, said Roach.

With this new, unexpected debt, Roach gave Howden approval two weeks ago to freeze all new capital spending projects while council debates the issue further. "Nobody budgeted for cost overruns of the new complex," said Howden.

The town's financial situation "is certainly solvent, but we're not flush, let's put it that way," said Howden. He described the situation as "constrained."

That assessment, said Roach, is "putting it mildly."

The town's debt load is matter for serious concern. Already $2.4 million in the red, the town has incurred a number of new debts this year. A $400,000 loan was approved after last year's plebiscite to complete the arena.

Add to that a series of loans related to the arena -- one for $700,000, another for $200,000 -- and the recent $385,000 loan to cover the arena cost overruns.

About 75 businesses and residents owed the town some $833,000 in unpaid taxes as of December last year. Since then, about $153,000 has been collected. But a further $120,000 was written off by the town when it determined some of those bills were not collectible. The current bill owed by delinquent taxpayers is now $560,000.

"It's not fair that some people are paying their taxes to subsidize those who don't," said Howden.

"We've always been prepared to enter a two-year agreement with people to help them pay their taxes," said Howden. "If the bill is too heavy, we've suggested they go to their bank and get refinanced."

What is most troubling about the unpaid tax situation is that the town has been forced to seize a number of properties in lieu of taxes long overdue.

Thirteen properties have been seized since last December, with three more in various stages of seizure. But in this soft real estate market, selling the properties at a profit is proving difficult. One such example was a seized trailer, which only attracted a single bid, for about $8,100.

Council argued over whether to accept the bid, but chose in the end to re-tender the property.

Tax arrears have actually been shrinking since 1995, when the numbers topped $1 million, said Howden. Since then, the town has been more aggressive in pursuing the bills, and have successfully whittled those numbers down.

Council debated last December whether to post the names of delinquent taxpayers, to speed up payments. According to Howden, it was later learned that this practice was illegal under the Cities Towns and Villages Act.

The legislative assembly will be reviewing changes to the act over the next several months that will allow posting names, however.

Howden said he was confident the amendments will be approved by the assembly by next April. Posting the names is "a little added push," he said.

Roach said raising taxes might be the only answer to covering the debt. "That will have to be a consideration," said Roach. "We cut (services and spending) to the bone last year, and people expect something in the way of services for their taxes." Property taxes have not been increased in five years, while costs certainly have been on the rise.

With Inuvik in serious economic decline, "we have to take a long hard look at things and modify our dreams and aspirations," said Howden. "Inuvik will come back over time. With the (IPC) gas project and other things coming, it could turn around overnight."

"The town isn't going to dry up and blow away over night," said Roach. "We'll find a solution and deal with this."