Yellowknife (Feb 17/03) - Finance Minister Joe Handley will push the territory deeper into debt to feed a hungry economy.

Last Thursday, Handley tabled a budget with a $77 million deficit budget and said the GNWT's total debt could hit $214 million by next year.

"Our economy is strong," said Handley before introducing his fourth budget as finance minister.

"There's high employment and a lot of economic activity. This is not a time to stop spending."

Handley blamed most of the current fiscal year's $106 million deficit on the federal government's funding deal with the NWT -- a deal known as the Formula Financing Agreement. He said that arrangement is inadequate for the North's fast-growing resource-based economy.

That agreement expires in March 2004.

Handley offered no clear solution for his government's deficit woes. He said the feds simply must give the GNWT an extended borrowing limit in two years -- or a new funding deal -- or else programs and services will be cut.

"Federal government partnership and investment is not happening in as timely or complete a manner as the situation demands," Handley said. "Without it, many opportunities will be lost."

Handley, wearing moccasins to deliver his budget address, said he is "optimistic" the federal government will cut a better deal with the GNWT before it hits the $300 million borrowing limit, something that could happen in 2004-2005.

He added negotiations with the federal government on transferring responsibilities and resource revenues to the NWT will help -- but not solve -- the territory's financial situation.

Health and education are the areas that will receive the biggest spending boosts during the next year.

The health and social services budget will increase by $26 million while education spending rises by $8 million.

On the revenue side, tax hikes on tobacco and alcohol will raise an additional $3.5 million.

Cabinet minister Jim Antoine said the GNWT took on a lot of "big ticket items" this time, "that don't need to be revisited in the future," he said.

"We took care of the big hospital in Inuvik, the jail. Whoever is going to come in the next government, they don't have to deal with these big ticket items.They can deal with quality of life in the North."

But MLA David Krutko had some harsh words for Handley.

"We've added drastically to the deficit of this government," Krutko said Friday. "That's not good government."

It was the now-infamous Krutko who blocked a full release of the main budget document on Thursday.

Deh Cho MLA Michael McLeod saw good things in this year's budget. He said he likes how it takes into account many of his concerns, including the Hay River Reserve road upgrade.

"It is costly," he said. "We keep chipping away at it."

The whole project is estimated at $3 million. Last year the GNWT spent a million dollars on it, and this year $200,000.

The budget also contains funding to improve the swimming pool in Fort Providence -- a project that has been in the works for five years, McLeod said.

"Even the grandparents were complaining. It was a big issue."

The town is on the banks of the Providence rapids, explained McLeod.

"There's no way you're going to learn how to swim in that river. The current is too swift. So I'm very glad the pool is in place."

He said is also pleased to see $250,000 for the Deh Cho Bridge project.

Other projects announced in the budget include an outdoor skating rink in Colville Lake, a curling rink in Aklavik, and a new community arena in Lutsel K'e.

Krutko added he is pleased to see continued funding for water treatment facilities.

"Sometimes communities feel government moves too slow when it comes to health concerns. Particularly water in their communities. With this project we're hoping we see actual construction this year. Every community I represent, we've had crisis situations with the quality of water."