SOMBA K'E/YELLOWKNIFE
The Government of the Northwest Territories plans to cut $53 million from its programs and services over the 2016-17 fiscal year but that still won't stop the GNWT from running a huge deficit in the tens of millions.

Robert C. McLeod, the territory's finance minister, takes questions from reporters Wednesday ahead of his budget delivery speech in the legislative assembly. Behind McLeod is the territory's deputy finance minister Mike Aumond. The government is slashing $53 million from its programs and services as it commits to a financial management plan that aim to raiser and/or cut $150 million from its spending over the life of the 18th assembly - John McFadden/NNSL photo

The cuts amount to three percent of overall operational spending.

Finance Minister Robert C. McLeod unveiled the financial blueprint in the legislative assembly on Wednesday afternoon. It calls for $1.66 billion to be spent over the next fiscal year on government operations while running a $54 million deficit.

Last fall, prior to the territorial election, MLAs in the 17th legislative assembly passed a $320 million capital budget. This has led to spending commitments made in the two budgets that exceeds $1.8 billion in revenue the government is taking in which is forcing the government to increase its borrowing, according to deputy finance minister Mike Aumond.

The budget also calls for some layoffs, likely less than 20, a number whittled down from an estimated 58 job losses indicated by the government last week.

Although the budget calls for the removal of millions of dollars in funding for various programs and services, McLeod insists it is not an austerity budget.

"I looked it up this morning. An austerity measures budget is one where there (is) a lot of job loss and raising taxes to try to offset some of your expenditures," he said. "We're down to 19 positions that still haven't been accommodated."

McLeod pointed out those job losses will be offset by the creation of approximately 28 new positions. He said austerity measures generally include severe layoffs and that is not the case here.

It is the first budget delivered by the veteran politician - McLeod was named finance minister by Premier Bob McLeod after last fall's election.

Earlier this year, he announced the GNWT has set a target of $150 million in savings or new revenues to establish a short-term cash surplus by the end of the 18th Legislative Assembly.

McLeod said his budget falls in line with that priority. The combination of expenditure management and increased revenue totals almost $68 million or 45 per cent of that $150 million target.

The legislative assembly will now debate the budget over the next month with input from the various departments. Cabinet will need at least three regular MLAs to support it in order to pass.

There are no new taxes in the budget but there is an increase in some user fees. If approved, air travellers will pay an airport improvement fee in order to fly out of the Yellowknife airport. It will be $10 per passenger on planes flying to destinations north of Yellowknife and $20 to fly south.

The government said despite the already high cost of living in the NWT, these fee increases are needed because the territory's economy is so sluggish.

Aumond said the NWT is the only jurisdiction in Canada that is still suffering the after effects of the 2008 recession. Revenues remain flat for the GNWT and they are actually forecast to decline by 0.1 per cent over the next four years. Over the same period, expenditures are projected to increase an average of 0.5 per cent. With the government's operating surplus declining, capital investment - specifically on infrastructure projects - also falls due to the restrain imposed by the fiscal responsibility policy.

The government intends to spend $379 million this fiscal year but that drops off over the next four years, falling to $117 million by 2019-20.