‘Too big an impact.’ GNWT revising some community funding changes

The NWT government is going back to the drawing board on proposed changes to the way the territory’s communities receive funding from the Department of Municipal and Community Affairs.

For the past decade, there has been broad consensus that the formula dividing up more than $100 million in funding needs to change.

Communities also want the overall funding pot to increase, arguing a significant shortfall exists that makes it hard to maintain infrastructure and keep delivering services.

Proposals to change the way communities are funded, in part based on recommendations made by a committee struck in 2014, were circulated to communities late last year. Broader funding policy changes had already been approved in 2023 but not yet implemented.

The proposals received backlash from small communities. Some administrators said their communities stood to lose hundreds of thousands of dollars in annual funding while larger communities received more money than they did before.

Community leaders also objected to changes that they said would oblige them to charge residents much more for water, and which they said might complicate the provision of staff housing.

Maca has since revisited the proposals in a series of sessions with communities. The department is now racing to finalize a fresh approach before next month’s NWT Association of Communities annual meeting.

Communities minister Vince McKay said the original proposals based on the 2014 committee’s recommendations had gone too far.

“I do feel that there was too big of an impact,” McKay told Cabin Radio last week.

“We’re still into that process of what exactly the outcome’s going to be. We’ve heard lots of concerns and the department has taken a lot of those into consideration. We’re still working on the final outcome.”

McKay said an April 1 target for implementing funding changes remained in place.

“I’m hoping [communities] would have a good idea of the direction by February,” he said.

Earlier this month, two community senior administrators who had voiced reservations about the original proposals expressed cautious optimism that progress was being made.

Below, read a full transcript of our interview with the minister.

This interview was recorded on January 10, 2025. The transcript has been lightly edited for clarity.

Ollie Williams: Why does the way communities are currently funded by Maca and the GNWT need to change?

Vince McKay: It’s been a longstanding issue that some communities were concerned about being underfunded while some other communities were being overfunded.

Years ago, way before my time as minister, there was a committee struck to look at it. I think there were 17 representatives from the other communities that sat on this committee. They reviewed the funding policy and found there was some flaw to it, and they came out with recommendations on how to proceed with a new funding formula.

The general sense of the draft changes is that larger communities would get a bit more money and smaller communities would get less. One SAO described this as “giving all the money from the small communities to the large communities.” What is your department doing to make sure that small communities don’t feel that way?

In the May-June sitting of the session we were hit with a motion to implement the 2014 recommendations from the committee. I committed to looking at it and trying to find a path through it.

However, I do feel that there was too big of an impact. The department wanted to go to the communities, consult with the communities and get feedback on how we could implement this a little smoother.

We’re still into that process of what exactly the outcome’s going to be. We’ve heard lots of concerns and the department has taken a lot of those into consideration. We’re still working on the final outcome. We’re looking at the whole formula and applying it fairly and equitably through the percentages.

You’re saying Maca has acknowledged maybe some of these changes did do a little too much and you’re still in the process of looking again at that?

That’s right.

A portion of the change that a lot of people did have concerns with was the suggestion that communities would need to charge everybody the same water and sewer rate, rather than what they often currently do, which is charge government more and residents less. Some communities said if that change goes ahead, it could mean residents have to pay three or four times their current water rates. Is that something Maca is reconsidering?

Yeah, the department has looked at that and that’s one of the considerations. Like I said earlier, the recommendation from the committee was to apply the percentages equitably across the board. However, the department does recognize the unique situation in some of the communities, and that’s one of the considerations for sure.

Some communities told us the changes would mean they can’t use capital dollars on housing any more. Is that something that’s being reviewed here?

The staff have heard that concern. I heard that concern in my meetings with the SAOs and mayors and chiefs. It’s definitely a concern and it’s something that the department has considered also.

Is there anything that is definitely going ahead? Is there anything absolutely locked in at this point where Maca and the communities have agreed on a change?

Well, the for-sure thing is there is going to be change. However, what the changes will look like once we’re done consulting with all the communities? That’s still up in the air.

We do have a more clear direction on what the changes might look like with less impact to the communities. Unfortunately, we have $110 million that we distribute annually through the communities. That hasn’t changed in a while, and that’s what we’re working on also is finding ways to get more money for the communities.

The original intention was to roll out some of the changes for April 1 this year. Has that timeline changed, realizing that there’s a lot of back-and-forth still going on?

No, the department’s been working really hard on this. The staff have been working really hard on it. They’ve been consulting with the communities. We’ve reached out to the majority of the communities to hear from them, so our planned date is still April 1. That’s still the target.

Do you have a date on which you would expect communities to know what’s coming on April 1? Is there a date before that by which you expect to have everything finalized?

Our goal here is to communicate as much as we can. I know we’re working with the MLAs and talking to staff throughout the communities. We also have the NWT Association of Communities AGM in February in Yellowknife. There’s going to be some talk there. I’m hoping they would have a good idea of the direction by February.

Getting this right will be a big issue for Maca this year. What other files are top of your priority list as Maca minister in 2025?

The funding formula is a big one. It’s going to impact every community.

Sometimes, communities feel left out to a certain degree, not realizing there’s lots of support out there for them. Maca has some great staff in the communities. Our goal is for the department to continue to support the communities and try to work through this transition and support them while doing it. That’s probably our main goal with the department this year.