Yellowknife (Mar 17/04) - When Finance Minister Floyd Roland delivers his first budget address today he is expected to target the government's borrowing limit.

Under federal rules, the territorial government is only allowed to carry a debt load of $300 million.

Floyd Roland

While Finance Minister Floyd Roland contends that this year's debt will be somewhat less than the $200 million-plus predicted last year by former finance minster and now premier Joe Handley, he said the government may still need to seek a higher borrowing limit.

"We are looking at it as one of the tools available to government," Roland said on Monday.

"If extending our borrowing situation is something that we, as a government, feel we need to do, then we'll look at how we can do that."

The lion's share of the NWT's overall debt -- about $148 million -- comes from two Crown corporations: the NWT Power Corporation and the Housing Corporation.

"When we have a $300 million debt limit and half of it is taken up by the two Crown corporations, that doesn't leave us a lot of room to manage the other debts," said Roland.

Roland couldn't say exactly how much each individual company owes, although he said the Power Corp's debt is slightly larger. The territorial government inherited a considerable debt when they took over Power Corp from the federal government in 1988, he said.

A similar situation occurred when the GNWT took over the Housing Corp, Roland said.

Infrastructure costs, like those stemming from the fire that destroyed the power plant in Fort McPherson last January, continue to hamper the government's ability to pay off the debt, said Roland.

Roland said it will likely be a long time before either corporation's debts are paid off.

Range Lake MLA Sandy Lee predicts that unless the federal government forks over another $100-200 million, the GNWT will max out the debt wall within two or three years.

"Unless we do something now, the deficit is going to get much worse," said Lee.

A deficit in the neighbourhood of $45-70 million is expected to be announced today. As a result, Roland said a personal income tax increase may be necessary.

"There are a number of tax initiatives and that is an area we're looking at," said Roland.

Some regular Yellowknife MLAs say they won't support a personal tax increase.

"The cost of living is already too great a deterrent to attracting people to live here," said Kam Lake MLA Dave Ramsay. "I can't support a personal tax increase.

Great Slave MLA Bill Braden said he may support a personal tax increase, but only if the government makes a strong enough case.

"Taxation has so many arms and legs to it," said Braden. "Along with a tax increase may come rebates or subsidies or all sorts of things in other directions."

Yellowknife Centre MLA Robert Hawkins said he may vote against today's budget because he doesn't feel the government has done enough to eliminate costs.

He said the government's $1 million-plus plan to install a regional health authority in the Sahtu is one example of money that could be better spent elsewhere.

"I'm still thinking about it," said Hawkins.