As promised three years ago, the territorial government is loosening its purse strings with the 2014-15 budget in order to start building the infrastructure required to increase its economic base on “the eve of devolution.”
Starting off the third year of the 17th Assembly with a $200-million surplus made possible by two frugal years of debt repayment and saving, the GNWT is increasing its capital plan by $100 million over the next two years.
A total of $27 million will be invested in new programming to address needs in health, social services and education, while $230 million is budgeted for public infrastructure projects.
Finance Minister Michael Miltenberger symbolically announced the shift to increased spending with the purchase of a pair of new shoes for budget day, but was sure to emphasize the government’s focus on fiscal restraint is still at the fore.
“We’re on our plan as we’ve laid out from the start: year three we would enjoy the fruits of some of our fiscal discipline of year one and two, as we kept our costs under control and replenished our reserves to the best of our ability so we can, in fact, beef up our capital plan,” the minister said at a press conference Thursday morning. “We have honoured that commitment in spite of some fairly significant challenges.”
Those challenges include maintaining the same level of spending on programs and services despite drops in tax revenues across the board, massive infrastructure debt and a stagnant population base that is barring increased federal grant money through the Territorial Financing Formula (TFF).
Benefiting from devolution
The biggest increase in the new budget is tied to devolution, with $59 million allocated to administering the transfer of responsibilities over lands, water and resources to the NWT, nearly half of which will go to establishing the new Lands department.
Those new funds have been made available through a $67-million increase to the TFF grant, and allow for $9 million in flexibility to address unanticipated costs associated with devolution.
Population boost needed for more transfer funding
An estimated $120 million in gross resource revenues is on the books, of which a maximum of $45 million will actually stay with the GNWT after splitting it 50-50 with Canada and sharing 15 per cent with the Aboriginal governments.
Resource revenues will not go to programs and services, but instead to infrastructure and debt repayment. And after long debate, the originally proposed 5 per cent of resource revenues will go to the Heritage Fund, and not more, despite public criticism.
“It’s an issue of disciplined choices,” Miltenberger said. “We have a number of challenges; we have modest revenues and expenditures that are exceeding those revenues…So not only are we having to save money for the future, we also have an obligation here with devolution and building our economic base to put in some long-term economic infrastructure that is critical.”
The $120 million, based on a five-year average, represents 5 per cent of the territory’s gross expenditure base, the maximum the territory stands to gain from devolution. To raise that limit will require raising that base, or population of the territory.
Increasing the population
Along with the budget details, Miltenberger announced that the GNWT is making a strategic shift in favour of boosting the territory’s population by 2,000 people over the next five years in order to secure more TFF funds from Canada.
Each new resident will result in an additional $30,000 for the territory, to a total of $50 million if the government meets its goal, not counting the additional taxes and other spending done by individuals.
“We’re not going to raise taxes, but we’re determined we’re going to do all the things necessary to grow our economic base,” Miltenberger said. “We want as much of it as we can to stay in the North.”
The GNWT has had preliminary meetings with business to get momentum on recruiting employees to the North, but a large part of the effort will go into ensuring at least 20 per cent of Northern students return to the North after attending school elsewhere.
“What we’re losing by not dealing with some of these issues is in the hundreds of millions of dollars a year in lost revenue to the Northwest Territories,” Miltenberger said. “So it is a critical piece of our plan; this is not just a nice, high-profile political initiative. This is a very significant economic base-building initiative where we’re bringing in all the senior players in government and the private sector to put our minds to this.”
Some of that movement is already included in this budget, with $22.6 million over three years to increase housing in smaller communities where job vacancies lie.
Raised debt ceiling crucial
Crucial to the retention of residents in the territory is the government’s ability to make investments into economic infrastructure like roads and transmission lines, an ability currently hampered by the NWT’s federal borrowing limit of $800 million.
Though the GNWT currently has the money for its capital plan approved last fall, it is waiting to see if larger projects can also be financed.
Miltenberger, who is requesting the debt ceiling be raised by $1 billion, said talks of an increase have been positive, and will be necessary for the success of the territory’s fiscal strategy moving forward.
“We’ve had very productive discussions with the federal government. They recognize that we’re a well-run jurisdiction; they recognize that we’ve managed ourselves like a mature political jurisdiction should…There’s a whole lot of indicators that signal our ability to manage another billion-dollar bump up to our borrowing limit, should that negotiation successfully conclude,” he said.
“That’s an absolute major issue for us. If we can’t invest significantly in economic infrastructure, it puts us on a much smaller track to try to build our economic base.”
- $59 million for devolution transfer: $27 million for new Lands department; $14 million for new responsibilities in Environment and Natural Resources; $13 million for Industry, Tourism and Investment responsibilities; $5 million for central agencies to manage new assets and administration.
- 102 new jobs outside of Yellowknife, more than half of which are as a result of devolution.
- $5 million to the NT Housing Corp. to increase public housing stock.
- $2.6 million for the new Anti-Poverty Strategic Framework.
- $2 million for increased early childhood education.
- $2.6 million to fund initiatives recommended by the Minister’s Forum on Addictions and Community Wellness.
- $515,000 to hire two full-time midwives in Hay River.
- $3 million to support the implementation of both the Economic Opportunities Strategy and Mineral Development Strategy.
- $1.4 million to design a 65-km transmission line connecting Whati to the Snare hydro grid.
- $1.9 million for alternative energy projects, including biomass, solar and wind.
- $11.5 million for increasing long-term care, emergency health and housing services.
- No new taxes, but property tax mill rates and fees have been adjusted for inflation.