Kerry McCluskey
Northern News Services

Iqaluit (Nov 25/02) - Cuts to federal funding and a decision to spend money means Nunavut now faces an overall operating deficit of $74 million.

Finance Minister Kelvin Ng originally forecasted residents would enjoy a $2 million surplus this fiscal year.

Ng said the federal government cut their funding transfer by $17 million to $729 million.

"That happens on a regular basis. Every year there is an adjustment based on prior years. It tinkers up and down," said Ng.

Several unexpected funding decisions -- bringing the total expenditures for this fiscal year to $803 million -- also contributed to the deficit. Those expenditures include a $16 million staff housing initiative and a $5.9 million price tag on the territory's three new regional health centres.

Ng also said $9 million in unexpected infrastructure demands, including Pond Inlet's new sewage lagoon, also factored in.

While Ng said he recognized the danger of a deficit and possibly a debt in Nunavut, he said the government could not ignore areas desperate for financial assistance.

"We knew at some point we would have to make some strategic investments to recognize our needs and put forward our case for additional funding in the longer term. There are some wise investments we've made," he said.

"We have to be careful that we don't create a debt. Hopefully we don't get there."

Despite the projected deficit, Ng said, the territory was still facing an accumulated surplus of $22 million at the end of the fiscal year.