Nathan VanderKlippe
Northern News Services

Yellowknife (Oct 04/02) - Extra spending and lack of support from Ottawa could push the GNWT to a $60 million deficit this year.

Finance Minister Joe Handley warned that any numbers are "speculative" right now, but hopes of a $12 million surplus in February's budget have been dashed.

"We made a conscious decision to not just keep tightening our belts," said Handley. "We've got good assurance from the federal government they are going to work with us on this but we can't wait for them to write us a cheque. So we have been investing a lot of money over the last three years."

Handley said the looming deficit could force the government to stop spending on non-renewable resource development.

"We have to invest money, maintain our roads, spend money in our communities on training people and support to business. We can't afford it if the federal government is going to keep us on a pauper's budget by clawing back 80 per cent of everything we earned," he said.

He warned that a $60 million deficit is possible if nothing changes and the federal government does not provide extra money for health care or infrastructure.

"But I wouldn't even want to predict that that's where we'll end up," he said.

Handley said he has been lobbying Ottawa for money to mitigate the impending deficit -- and has until next spring to do so. Already, two of those efforts have virtually disintegrated. A bid for $234 million for a non-renewable resource strategy has produced only $3.5 million, while a request for $133 million in infrastructure money looks like it will draw only $20 million.

But the possibility of being in the hole can't be blamed on one particular project, he said, pointing to additional spending on both capital and social programs, including $44 million for a regional hospital in Inuvik, $11.5 for water treatment facilities and $11 million for education.

Bloom off budget rose

The changed financial situation has Range Lake MLA Sandy Lee accusing the GNWT of spending like "drunken sailors."

"I don't think anybody should get off the hook for getting us into a deficit situation like that," she said, adding that the February budget looked "rosy" but was based on improper assumptions.

For example, she said, the government should have known that a windfall of corporate tax money last year -- which helped push the GNWT to a $23 million surplus in 2001-02 -- was a one-time bonus.

Frame Lake MLA Charles Dent said the deficit is part of a normal territorial budget cycle.

GNWT transfer payments are always based on revenues from the previous year, and last year the GNWT took in $400 million in corporate taxes -- of which it kept $80 million.

"It gets to the point where the more money we generate ourselves the more likelihood of going into deficit," said Handley.

However, said Dent, the territorial government is getting perilously close to the so-called "debt wall" -- the GNWT is only allowed to carry a debt load up to $300 million. That's now two years away, said Dent.