GNWT ‘tempers increase’ by making some cuts in new budget

The NWT government unveiled its new budget on Friday with a planned $48.4 million in cuts, although overall spending will still increase slightly.

The proposed budget for the 2024-25 fiscal year projects an operating surplus of $294 million with $2.6 billion in revenue and $2.22 billion in spending.

The government plans to use that surplus – which finance minister Caroline Wawzonek said is the largest in 25 years – to fund its $268-million capital plan, which pays for infrastructure like roads and buildings.

“This is not a ribbon-cutting budget, and that is a good thing,” Wawzonek told reporters.

“We want this government to be sustainable for the long term.”

In February, Wawzonek and Premier RJ Simpson revealed the 20th Assembly’s fiscal responsibility strategy. It aims to find $150 million in savings annually by reducing government spending and increasing revenues, among other goals.

To achieve that objective, territorial departments were tasked with reviewing all programs and services. Government employees were also asked to submit their ideas to cut costs or make more money.

Nine hundred public servants submitted more than 1,800 suggestions, ranging from charging mushroom pickers royalty fees to reviewing territorial assistance for businesses and non-governmental organizations.

Wawzonek said the latest budget “represents difficult choices” to achieve the fiscal strategy’s goals but does not reach the $150 million target. Wawzonek said this “was never intended to be an austerity budget” or “making cuts simply for the sake of cuts.”

The budget includes $48.4 million in reductions across departments while revenues are expected to increase by $52 million.

“It’s not exactly a reduction budget, but we are tempering the increase in expenditures,” deputy finance minister Bill MacKay told reporters.

Officials said for next year’s budget, departments will have to find a combined $65 million in spending cuts or increased revenues.

The NWT government plans to pay off $49 million in debt, with total debt expected to reach $1.6 billion by the end of the fiscal year, below the federal cap of $1.8 billion.

The territory aims to repay $150 million in short-term debt by the end of March 2028.

Where is the $48.4 million coming from?

One of the cuts proposed in the budget is the closure of the men’s jail in Fort Smith, expected to save the NWT government $2.7 million. Territorial officials have notified jail employees about that plan.

“We currently spend millions of dollars to run the Fort Smith Correctional Complex that has capacity for 21 inmates but on average only has 10,” Wawzonek said, adding the jail has more employees than inmates.

“This is an example of connecting the dots between an inefficient use of public funds to areas of need that reflect the priorities of the Assembly.”

The NWT government plans to look at how the corrections facility could be repurposed into a wellness centre.

“It could be a really exciting opportunity to do something, I hope, quite bold and quite different than what we’ve seen in the past,” Wawzonek said.

In total, the budget proposes cutting 91 public-sector positions, 58 of which are currently staffed and 33 of which are vacant.

NWT officials noted, however, that no lay-off notices have been issued and the budget is still subject to review by regular MLAs.

Other cost-saving measures proposed in the budget include $1.6 million in savings from infrastructure leases, $900,000 from discontinuing the midwifery expansion in Yellowknife, and $300,000 in printing costs from the education department.

Total reductions by department:

• Education, Culture and Employment: $12.99 million
• Finance: $9.33 million
• Infrastructure: $7.72 million
• Environment and Climate Change: $4.96 million
• Health and Social Services: $2.98 million
• Justice: $2.89 million
• Industry, Tourism and Investment: $2.67 million
• Housing NWT: $2.39 million
• Municipal and Community Affairs: $1.57 million
• Executive and Indigenous Affairs: $838,000

This is the first budget of the 20th Legislative Assembly, reflecting its priorities and mandate, which focus on housing, the economy, healthcare, emergencies, public safety and addressing the effects of trauma.

$52-million increase in revenues

The budget’s increase in revenues largely comes from federal transfers to the health department regarding medical travel.

Beginning July 1, the federal government will also begin collecting a vaping products tax on behalf of the NWT government that is expected to increase revenue in the territory by $252,000 this fiscal year. Ontario, Quebec and Nunavut have entered into similar agreements with the Canadian government.

The budget also plans to increase the 9-1-1 levy on phone users in the territory from $1.70 to $3 a month. That will raise an additional $700,000 annually, which is expected to make the 9-1-1 service cost-neutral.

Increases to the carbon tax implemented last month are expected to generate an additional $14.7 million, which the NWT government said will be returned to residents, communities and industry through offsets or used for projects to reduce greenhouse gas emissions.

Spending to increase by $24 million

While the budget includes spending cuts, departmental spending is still expected to rise by $24 million – an overall increase of 1.1 percent – compared to the last budget.

That includes $42 million to address increased demand or costs for current programs, $4.6 million for new initiatives in 2024-25 and $3.1 million to fulfill initiative commitments from the previous assembly.

For example, the budget earmarks $1.4 million in new spending for the health department and $154,000 for infrastructure related to a transitional housing addictions recovery program in Yellowknife and Inuvik, to ensure people returning from treatment have a safe place to continue their journey.

Territorial officials initially told reporters the program was launched as a pilot in Inuvik in 2021. The health department later said, however, that expressions of interest were issued in December 2021 and while Housing NWT purchased locations, the program is still being finalized and expected to launch this fall.

The budget also proposes funding for several new jobs.

That includes $332,000 for one indeterminate position and six relief positions to staff 9-1-1, as well as $270,000 for a senior information privacy specialist and an information and privacy analyst to help the territory meet its responsibilities under the Access to Information and Protection of Privacy Act.

The budget proposes $483,000 to fund three new full-time positions to improve emergency management – an assistant fire marshal, an emergency management incident command system trainer and a senior communications and planning advisor. The Legislative Assembly plans to spend $141,000 on new intern positions.

Additionally the budget proposes spending $1.3 million to create a Territorial Crime Reduction Unit to support the RCMP with investigations and enforcement aimed at disrupting the territory’s illicit drug supply and targeting criminal networks.

It additionally includes $372,000 to enhance the RCMP’s emergency response team and $2.4 million to create four new officer positions across the NWT through the First Nations and Inuit Policing Program and two additional general duty officers in Fort Providence.

Other spending highlights in the budget include:

• $30 million for a contribution to the NWT Power Corporation to address low water levels and avoid power rate increases;
• $29 million for response and recovery to flooding in 2022 and wildfires in 2023;
• $6.9 million for Hay River harbour dredging;
• $2.2 million to implement the National Action Plan to End Gender Based Violence;
• $521,000 to complete regulations for the Mineral Resources Act;
• $529,000 for the NWT Film Strategy;
• $433,000 for the Energy Action Plan;
• $360,000 to develop a fast-charging network for electric vehicles; and
• $100,000 for the Tourism 2025 investment strategy.

Clarification: May 27, 2024 – 10:28 MT.  This story was updated to reflect a clarification from the Department of Health and Social Services. While budget officials initially stated a transitional housing addictions recovery program began as a pilot in Inuvik in 2021, the department later clarified expressions of interest were issued in 2021 and infrastructure was purchased but the program has yet to launch.