NWT begins introducing changes to community funding

The NWT government has begun implementing changes to the way it funds communities.

At the start of this month, the Department of Municipal and Community Affairs, or Maca, launched a three-year transitional approach to shifting how it allocates funding to 32 community governments across the territory.

The department says the changes will ensure available money is distributed fairly and equitably based on a transparent model.

On Tuesday, representatives of the department updated Yellowknife councillors on the changes and how communities will be impacted.

According to Grace Lau-a, director of the department’s community operations division, Maca has $130 million in its annual budget to fund community governments.

That is divided into $53 million for capital funding to support municipal infrastructure like roads and recreation facilities, $54 million for operations and maintenance, and $22 million for waste and water.

“For most NWT communities, this funding is the main support for community government programs and services and for municipal infrastructure,” Lau-a said.

She said under the changes, funding for infrastructure, waste and water will move toward a more equitable distribution among communities. The territorial government plans for all communities to receive funding to cover 84 percent of their capital costs and 56 percent of waste and water costs by 2027.

Lau-a said those changes are being implemented over three years “to allow for a smooth transition and recognizing that small communities have less capacity to adjust to changes in funding.”

She said the shift will decrease more than 20 communities’ funding from the territorial government.

“With any distribution model, any change to one community will affect all,” she said.

Operations and maintenance funding will remain unchanged for three years, Lau-a said, save for communities that already received funding for more than 100 percent of those costs, who will see their funding reduced to 100 percent “to reduce long-standing disparity.”

Why the GNWT is changing its model

Implementation of the changes to community funding has been a long time coming.

A 2014 review of the previous formula for dividing up community funding, which had been unchanged for more than a decade, recommended that the department move to a community allocation model – one based on community assets and the costs associated with operating and maintaining those assets.

The department then updated three polices in October 2023 regarding how funding is allocated to community governments.

The territorial government announced draft plans to implement those policy changes last year. However, Maca ultimately scaled back some of those plans after the proposal drew criticism from some smaller communities about potentially large funding cuts, among other concerns.

The department has said that under the previous funding model, where communities were given base funding plus a per-capita amount, some communities received more than 100 percent of their estimated standard costs while others received less than 60 percent.

“The disparities are not just between small communities and large communities,” Lau-a told councillors on Tuesday. “There are large variations between communities of similar size.”

For example, Lau-a said, under the community allocation model, 100 percent of Yellowknife’s funding would be $28 million. In 2024, she said, the city received $19 million, or roughly 68 percent of its costs.

Starting this month, Lau-a said, the city will be among the communities that see an increase in funding for infrastructure as well as waste and water.

Funding ‘never intended’ to cover all costs

Communities minister Vince McKay has said the funding provided by Maca to municipal governments “was never intended” to cover all of communities’ costs but to help fund core programs and services.

Lau-a said funding municipal services is a shared responsibility between the territorial, federal and community governments.

“Each community government must make their own decisions about what services to provide and how to fund any cost beyond what is covered by Maca core services funding,” she said.

Regular MLAs have called for the territory to increase the overall funding it provides to communities to close that gap.

Lau-a said Maca has been meeting with communities about the funding model changes over the past year, “continues to take feedback” and plans to review the impact of the changes.

She said the department is also making policy changes to help address recruiting challenges related to staff housing needs and will be further analyzing water and sewer rates in communities to “ensure that core service remains affordable to residents.”