How is the GNWT changing the way your community is funded?

The NWT government has updated its community government funding policies, which will change the amount of funding many communities receive over the coming years. 

The policy changes were approved in October 2023, but the GNWT’s Department of Municipal and Community Affairs is now preparing to implement the funding changes that go along with those policies, according to Gary Brennan, deputy minister of Maca.

He said the new funding allocations will start coming into effect in April 2025. 

Under the new policies, many of the territory’s larger communities will see their funding increase. The bulk of small communities stand to see a drop in funding, as the CBC previously reported. 

For instance, Yellowknife is set to receive an additional $3,027,000 – the biggest bump in the territory, according to a draft table seen by Cabin Radio.

At the other end of the spectrum, Tsiigehtchic is slated to lose the most funding, with a $911,000 decrease according to the table. 

After this article was first published, Yellowknife’s mayor, Rebecca Alty, said Maca’s proposed funding mechanisms meant the amounts shown were highly unlikely to be the total amounts received by communities, and that the city would remain underfunded.

Asked about the table, Grace Lau-a, director of Maca’s community operations division, said the document was drafted in 2023 and shared with an advisory group when finalizing the policy changes.

She said the figures have since been adjusted and are still being finalized, but the anticipated changes for each community are still roughly “in the same ballpark.” 

On top of re-allocating funds across communities, the policy updates also bring in new rules about reporting requirements and how the funds can be used. 

Cabin Radio spoke to five people who work in community government administration, most of whom requested anonymity to discuss sensitive details without jeopardizing their employment. Many of them expressed concerns with these new terms and conditions.  

Under the new policies, for instance, community governments are no longer allowed to use capital dollars on housing.

“If you can’t have staff housing, how do you hire a [senior administrative officer] in a small community?” one person said, referring to the fact that community governments often hire staff from outside the community. Meanwhile, local housing options are generally extremely limited.

The new Maca funding policies also require community governments to charge all houses or similar buildings in the same area the same rate for water and waste services. 

This might sound reasonable at first glance, but community governments typically charge private, commercial and government users different rates for water and sewer services due to a subsidy program. In practice, this means privately owned homes are charged substantially less than units owned by the government, such as public housing operated by Housing NWT.

If all houses in the same area must be charged the same rate – including private dwellings and government-owned houses – community governments will likely have to drastically increase their rates to break even. 

One person anticipated water bills might quadruple in their community. Another estimated that water rates could triple. 

“That’s the bottom-line problem with this,” the latter person said. “It’s affecting people on the street … A lot of people can’t afford their water bills now and, if it triples, I don’t know what they’re going to do.”

Overall, the funding policy changes are going to be hard for a lot of communities, said Fred Behrens, senior administrative officer for the community government in Wekweètì.

“I’m surprised that there hasn’t been more political pushback on this whole thing,” he said.

What spurred these changes?

The funding policy updates came from a review conducted by Maca in 2014. 

At the time, “there was a general sense that not all communities were being funded equitably,” Maca deputy minister Brennan said. 

Generally speaking, funding was allocated according to a formula that provided a certain amount of base funding with a per-capita amount added to that, according to Brennan. 

“In general, smaller communities were given a larger base,” Brennan said, adding that another concern among communities at the time was that it was hard to understand the rationale behind the funding. 

To address these concerns, Maca launched the 2014 review of its municipal funding policies. In collaboration with the NWT Association of Communities, an organization that represents the interests of the territory’s communities, the department put together a working group of 29 members representing 17 community governments. Over a series of workshops, the working group discussed issues related to municipal funding and evaluated different options. 

The review highlighted a series of recommendations, including that the funding model should move away from a complex, per-capita system to one based on needs. The working group also recommended that funding methods should be based on current data, and that operations and maintenance funding should be linked to the infrastructure the community owns and operates. 

After the 2014 review, however, Brennan said there were concerns about taking money away from small communities. As a result, funding to small communities was not decreased.

In 2022, Maca returned to the issue, putting together a smaller advisory group made up of representatives from the NWTAC and Local Government Administrators of the NWT (LGANT), an organization that supports senior administrators working in local governments. According to Brennan, this group reaffirmed the work done in 2014. 

In 2023, Maca’s funding policies were updated and approved by the minister at the time. 

Although those policies are already in place, Brennan said Maca decided to push back the implementation of funding changes to April 2025 due to delays related to wildfire evacuations and the territorial election last year. 

Over the past few months, Maca representatives have been meeting with community governments to discuss the changes ahead and gather feedback on three possible implementation options. Whichever option communities decide on will be phased in over the next three years, Brennan said. 

How will funding be calculated?

Maca provides funding to community governments through three pots. One covers community public infrastructure or capital, such as roads, facilities and parks. Another pot covers operations and maintenance, such as costs related to administration and programs. The third pot covers water and waste services. 

When the new funding policies come into effect, funding will be calculated according to allocation models that take into account a community’s size, the infrastructure typically found in a community of that size, and the cost to operate and maintain that infrastructure. 

For instance, to calculate a community’s capital funding allocation, Maca started by breaking communities into three groups according to their population size – under 500 people, 500 to 1,000 people, and more than 1,000 people. The department then developed a list of typical assets found in communities of each size, and added up each asset’s estimated annual replacement cost, spread over the asset’s average lifespan. 

Similarly, to calculate operations and maintenance, Maca estimated the cost to operate the typical suite of assets in a community of a certain size. The department also took into account cost estimates for public safety and recreation programs and administration. 

Finally, water and waste funding was calculated based on standard costs for the type of water delivery and sewage treatment system each community government runs. 

The data used to calculate costs came from a mix of sources, including community-specific values and standard rates, such as industry standards or average costs across NWT communities or communities in other jurisdictions, according to Lau-a.

“It’s not our intention to capture everything and exactly what a particular community would be spending,” Lau-a said. “We are trying to find sort-of an equitable method to distribute the funding we have available.”

According to Brennan, Maca currently funds 74 percent of communities’ total estimated costs. But there are discrepancies around how much each community gets. Some communities are currently receiving more than 100 percent of their estimated total costs, while others are receiving less than 60 percent, according to Maca’s calculations.

The three implementation options Maca is currently discussing with communities would only cover a portion of a community’s estimated costs in each of the infrastructure, operations and maintenance, and water and waste funding pots. No community would get more than 100 percent funding in any category. 

Communities have concerns

Not everyone thinks the upcoming changes are fair. 

The changes are “basically giving all the money from the small communities to the large communities,” Behrens said. 

Wekweètì is facing a funding reduction of more than $700,000, according to Behrens, representing about a 30-percent cut. 

“It’s going to be pretty hard to figure out how we’re going to make a lot of things happen,” he added. 

One person Cabin Radio spoke to also disagreed with the idea that small communities are overfunded, saying that capital dollars are often left unspent because it’s hard to hire contractors to undertake work locally. Instead of taking funds away from small communities, they said, the government should instead be looking to remove some of the barriers that impede small communities from using their dollars. 

Several people Cabin Radio spoke to were more concerned about the additional terms and conditions attached to the funding policies than the funding changes themselves. They raised concerns about restrictions on staff housing and the new rules around water rates. 

Some people were also troubled by reporting requirements and timelines attached to funding. Under the new policies, community governments have two years to resolve issues that have resulted in unspent capital funds, according to slides prepared by Maca that were shared with Cabin Radio. After two years, Maca may reclaim those funds. Maca might also withhold funding or hire an auditor if community governments are more than a year late submitting an audit. 

That’s not how things worked in the past, according to Behrens. 

“When we get a contribution agreement, it says we’ve got X number of dollars. Those are our dollars. We don’t have to go back to Maca to find out how to spend those dollars.”

“I always said that Maca and the communities were in a partnership,” he added. “Today, it’s more of an adversarial, confrontational relationship than it is a partnership. Now, we’re being dictated to.”

The policy changes also came as a surprise to some, who only heard about them for the first time in the past few months.  

One person said that presenting discussions from a 2014 working group that only included a subsection of NWT communities as meaningful consultation is “ridiculous.”

Asked about these criticisms, Brennan said he disagreed with the idea that Maca is being prescriptive to community governments, adding that some policy changes are intended to give the department more flexibility and authority to help communities facing capacity challenges.

“We want the communities to be successful. That’s the whole goal of this funding,” he said.

While Brennan acknowledged that not all communities were part of the working groups engaged in discussions about the policy changes, he pointed out that there have been ongoing conversations about the changes over the years. Maca is also now trying to meet with every community government affected to talk about the changes and gather feedback, he said. 

Those meetings have highlighted concerns that Brennan said Maca had not previously heard, which he described as a positive development.

“These policies, they’re living documents,” he said.

“If we got it wrong, then let’s take a look at it and make sure that we can do what’s best.”

Update: November 28, 2024 – 8:56 MT. We’ve updated the graph in this article to reflect that the draft Maca figures include some federal funding alongside proposed territorial funding.