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SOMBA K'E/YELLOWKNIFE - Times are tough and they will only get tougher for smokers and drinkers.

As part of revenue raising measures, the NWT 2009-2010 budget announced Thursday increases the price of cigarettes by $11.20 per carton while liquor, beer and wine will rise 10 per cent in price.

Total expenditures: $1,201,592,000 Last year: $1,189,533,000 Forecasted revenues: $1,300,803,000 Last year: $1,258,575,00 Borrowing debt: $81 million New initiatives $246 million in infrastructure next year including $58 million for highways and roads, $74 million in school replacements and renovations, $17 million for airport and runway improvements, $19 million for hospital and clinic renovations, $4 million for improvements to parks $61 million for communities (nine per cent increase) $60 million over four years for energy initiatives $4.4 million for arts, culture and to promote the NWT as a place to live and do business $3 million on commercial Territorial Power Support Subsidy Taxes Tobacco tax: cigarettes up $11.20 per carton effective April 1, 2009 Liquor tax: liquor, wine and beer marked up 10 per cent Property tax: Select mill rate increases to generate 15 per cent more revenue By department (this year/last year) Legislative assembly: $15,650,000/$15,364,000 Executive: $11,891,000/$12,567,000 Human Resources: $35,079,000/$32,253,000 Aboriginal Affairs and Intergovernmental Relations: $6,807,000/$6,500,000 Finance $74,875,000/$83,485,000 Municipal and Community Affairs: $86,229,000/$82,441,000 Public Works and Services: $56,136,000/$58,182,000 Health and Social Services: $313,027,000/$308,872,000 Justice: $93,488,000/$93,047,000 Education, Culture and Employment: $299,631,000/$293,878,000 Transportation: $97,060,000/$96,465,000 Industry, Tourism and Investment: $50,870,000/$46,019,000 Environmental and Natural Resources: $60,849,000/$60,370,000

The new taxes come into effect April 1 and, with other initiatives, will generate an estimated $7.3 million a year.

Finance Minister Michael Miltenberger unveiled his first budget Thursday, announcing the territorial government will borrow up to $81 million from Ottawa this year - to be paid back before the next fiscal year - to fund its ambitious $246 million capital infrastructure plan.

Miltenberger said this spending will stabilize the territory's economy - 50 per cent of which is dependent on the resource sector - as exploration dries up, mines scale back operations and commodity prices nosedive.

"A serious economic downturn is not the time for governments to reduce overall spending, even though tax revenues may be decreasing," he said. "Government spending can provide the economic stimulus needed to maintain employment and sustain economic activity until the private sector can recover."

Territorial spending has increased to $1.2 billion, but expenditures are increasing by only two per cent, lower than the six per cent average growth experienced over the past eight years.

Revenues are up 3.9 per cent to $1.3 billion. Federal formula funding accounts for $59 million worth of new revenue as Canada now gives the NWT close to $25,000 per resident, up nearly $3,000.

The NWT's gross domestic product is forecast to shrink by 1.3 per cent, marking the second consecutive year it's expected to drop.

Miltenberger explained the sin taxes as both a revenue generating measure and an incentive for healthy living.

"At least half or 60 or 70 per cent of our health care costs are driven by personal choice decisions: alcohol abuse, smoking, the poor diet, the lack of exercise," he said. "If there is an added cost to tobacco and alcohol, that is absolutely fine with me."

He said those taxes hadn't been touched since 2003.

The government will also look at generating 15 per cent more revenue in property tax rates, including from mining, oil and gas, and pipeline properties. It will be the second largest source of increased tax income following higher tobacco and alcohol taxes.

Kim Truter, president of Diavik diamond mine, said although he didn't know the math behind the taxes yet, anything which raises the cost of doing business was "not nice to hear."

However, he said he was very supportive of infrastructure spending, which he said could lower "the cost of operations."

Mayor Gord Van Tighem said Yellowknife will benefit from a nine per cent increase in municipal spending, while funding for the territorial immigrant nomination program and promotional tourism funding will help recruit and retain residents.

However, he said that will be offset by increases in property taxes to the mines.

"The more it costs to operate, the shorter the life of the mines and the shorter they are contributing to the economy," Van Tighem said.

As part of last year's announced government cutbacks, 14 GNWT employees will lose their jobs this year.

Miltenberger said of the 140 positions eliminated last year, only 14 people lost their jobs.

Gayla Wick, representing the Union for Northern Workers, said she hoped the government would find positions elsewhere in the public service for the 14 affected employees.

She called it a "reasonable budget, due to the economic times in Canada and we are facing across the North."

In an interview, Miltenberger said this was the "greenest budget" he can remember.

It commits $60 million over four years toward alternative energy initiatives to move communities away from diesel fuel. This, he said, will reduce the cost of living and decrease greenhouse gas emissions.

The government plans to amalgamate the Financial Management Board Secretariat into the Department of Finance.

The assembly's gallery was packed with seniors, politicians and representatives for non-governmental organizations and parking spaces were hard to find on Thursday.

All the day's pomp and circumstance may be for naught, as a motion to oust cabinet will go ahead of the legislative assembly today. On Thursday morning, Miltenberger said he thought the motion was not based on the budget.

"The confidence issue is not about the budget. The budget has not even been presented yet and the motion is on the floor," he said. "There are other issues."

- See page 12 for more.