N.W.T. in talks to raise debt limit as budget projects slight deficit

The Northwest Territories government expects to spend slightly more than it brings in over the 2019-2020 fiscal year.

Balancing the budget has been "particularly challenging" over the last two years as revenues dropped $81 million, Finance Minister Robert C.McLeod said during his budget speech to the Legislative Assembly on Wednesday.

The territorial government proposes to spend $1.87 billion in the coming year and expects to bring in $1.93 billion, leaving a $60 million operating surplus.

All of that surplus amount, however, is expected to go toward infrastructure. The infrastructure budget, including that $60 million surplus, is estimated to be $199 million.

The territory has the "oldest infrastructure in the country," said McLeod, and a "significant infrastructure deficit" that hampers economic growth and drives up the cost of living.

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After all the tables are tallied, the government anticipates a cash deficit of $7 million. The territory hasn't had a cash surplus since 2011.

Meanwhile, the government expects to sink deeper into debt over the coming year.

Borrowing is projected to reach $1.1 billion, pushing the territory closer to its $1.3 billion debt limit.

The territorial government has begun talks with federal Finance Minister Bill Morneau about raising the territory's debt limit, McLeod told reporters on Wednesday.

"They seemed fairly receptive," he said.

McLeodsaid that during his tenure as an MLA, the federal government has raised the borrowing limit twice.

Federal transfers and grants comprise about 80 per cent of the territory's total revenue in 2019-20.

Money for wage increases in short-term debt projections

The budget does not include spending on potential wage increases, as the territory continues to negotiate a contentious collective bargaining agreement with the Union of Northern Workers.

On Tuesday, the union representing territorial government employees said if it didn't reach an agreement with the government during mediation this weekend, workers will strike on Monday, Feb.11.

The government has accounted for a $10 million increase in pay, based on its current offer, in its projected $325 million short-term debt.

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Finance officials said Wednesday that should a new collective agreement include higher wages than what the government is currently offering, the territory's debt will grow.

$3.3M to child andfamily services

Other than the carbon tax, which kicks in July 1, and the excise tax on cannabis, there are no new taxes or tax increases in this budget.

The proposed budget includes about $3.3 million in new money for the Department of Child and Family Services, which will pay for 21 new positions.

The new positions come after a damning auditor general's report in October, which said problems with the department responsible for protecting children have worsened.

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"We have to do better to support children and families and this budget proposes to accelerate plans already in place," McLeod told the Legislative Assembly.

Mining royalties are estimated to come in at $46 million in 2019-20, but the territorial government will only see about $13.1 million of that in its yearly operating budget.

That's because the federal government gets half the royalties, and of the remaining half, 25 per cent goes to Indigenous governments and about $4.4 million goes into the Heritage Fund, money used for low-risk investments.

Finance officials said, on average, the diamond mines account for 44 per cent of revenues generated through the fuel, payroll, property and corporate income taxes.

Weed couldbring in $2.65M

This is the first budget to include revenue from cannabis sales and the carbon tax.

Weed is estimated to generate $2.65 million in 2019-20, which will go into the government's general coffers.

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The carbon tax is projected to bring in $16.2 million over the next fiscal year. Of that, the government is proposing $7 million be returned to residents and businesses through rebates and benefits, $5 million to go to the mines for emissions reductions projects, and $3.7 million to the Inuvik wind farm.

Other budget highlights include:

• $15.2 million for the Stanton Territorial Hospital;

• $2.1 million for new child and youth counsellors in the Beaufort Delta and Sahtu regions;

• $1.3 million for a territory-wide 911 service;

• $1.2 million to study the mining potential of the Slave Geological Province;

• $325,000 for improvements to chemotherapy; and

• $400,000 for land-based addictions treatment and aftercare.