Hamlet getting out of debt
Gjoa Haven halves deficit in less than two years
Laura Busch
Northern News Services
Published Monday, March 10, 2014
UQSUQTUUQ/GJOA HAVEN
The hamlet of Gjoa Haven is following through on its promise to balance the books - and in good time.
When council voted in September 2012 to approve a five-year deficit-recovery plan, it faced a daunting $2.457-million deficit from the previous fiscal year.
By the time the 2013/14 fiscal year - the second year of the deficit-reduction plan - comes to a close on March 31, Gjoa Haven's new senior administrative officer Shawn Stuckey expects the overall debt for the hamlet to be less than $1 million.
"We'll beat that five-year time limit for sure," Stuckey told Nunavut News/North.
He credited the success story to his predecessor, Gord Denning, and Mayor Allen Aglukkaq and his council, who had the difficult job of reviewing every program offered by the city and finding where dollars could be saved.
"Council kept a very tight rein on the finances to keep it headed in the right direction," said Stuckey, who is in his first months at his post.
Jobs were cut from the administrative staff, and no new positions have been created since the plan came into effect.
Water and sewer rates were hiked up to a point that the service was no longer operating in a deficit, an issue that Stuckey said "contributed a fair amount to the original deficit in 2012."
The five-year plan was made in co-operation with the Department of Community and Government Services (CGS), which is mandated to enforce a strict no-deficit policy for hamlet governments.
CGS's job is to assist hamlets in reducing their deficits, said Darren Flynn, assistant deputy minister of Community Support Services, a branch of the department.
"Municipalities are autonomous governments," he said. "They set their own budgets."
Be that as it may, it is the Government of Nunavut which sets the rules against hamlets operating in a deficit. Under the Nunavut Hamlet Act, no municipal corporation may carry a deficit from one fiscal year to the next.
"Wouldn't you as a citizen of a municipality expect them to balance their books?" asked Flynn.
"I believe that is the expectation of most citizens - they expect their governments to operate a balanced budget. Because when you go into a deficit, you're really borrowing from future years."
Getting out of the red also gives hamlets more flexibility to provide residents with the programs and services they need, said Stuckey.
"If you're running a deficit, you don't have the ability to adapt and change with the future and offer the people of the hamlet everything that's possible," Stuckey said. "The hamlet and the administration and the council are here to do as much as they can with the funds that are available for the people of the hamlet."
While he said it was not up to him to disclose hamlets' financial figures, Flynn did comment on Gjoa Haven's numbers that were shared with Nunavut News/North.
"What that's doing is bottom lining," he said.
The general operating fund deficit was still higher than $1.7 million when last reported in December, he said. That figure has dropped roughly a half-million dollars since the beginning of the 2013/14 fiscal year.
Water and sewer is run through its own fund and is heavily subsidized to make the consumer cost more manageable. This fund is not factored in when calculating the general operating fund deficit, although having it operating at a surplus is good news for the hamlet's overall finances, said Flynn.
Despite the territorial legislation, hamlets running into trouble with debt is nothing new in Nunavut.
Currently, Gjoa Haven and Taloyoak are working with the department on supervision agreements that regularly report back to Department of Community and Government Services, said Flynn.
Taloyoak is in the process of developing its recovery plan, which will likely be in place by the beginning of April.
In Pangnirtung, council recently adopted a revised budget as part of its debt recovery plan, which is currently being finalized.
Two other communities will also "have to do a deficit recovery plan" in the near future, said Flynn, although he declined to reveal which hamlets are operating in the red.
"You do see deficits occur from time to time, but for the most part we don't have the number of communities in deficit that we saw 10 or 12 years ago," said Flynn.
"For the most part, municipalities do a really good job of trying to stay in good standing ... so they don't go off the rails."
As for Gjoa Haven, on March 31 its plan will reach its two-year mark, in which time it has halved the overall debt.
Stuckey likened the way the hamlet is being run now to a tight ship that is continuing to head in the right direction.
If it holds its course, Stuckey said Gjoa Haven will be debt-free before the end of the 2014/15 fiscal year - two years ahead of schedule.
