GNWT seeks public input on how to change its budget
The GNWT will host four online public engagement sessions to hear how residents think the territory’s money should be spent in the coming year.
Participants will be walked through the economic and financial factors affecting the NWT’s budget, then will have the chance to share the spending priorities most important to them.
Minister of Finance Caroline Wawzonek said the NWT remains in “reasonably good” financial shape, but says she wants to be realistic about how the pandemic has disrupted the territory’s economy.
Revenue is down and spending is up, which is expected to mean a lower surplus this year than the NWT initially predicted.
Normally, that operating surplus is used to fund one-off infrastructure projects in the territory. Losing some of the surplus means less cash to build with.
Wawzonek said that while there are signs of economic recovery and there is still a surplus, it is no longer enough to meet the needs of infrastructure projects identified in the NWT’s 20-year plan.
“If we are looking at the long term, we are going to have to consider how we can increase our surpluses to maintain that plan,” said the minister.
The territory’s political leaders have long maintained there is an infrastructure gap in the NWT compared to the rest of Canada, and have looked to the federal government for the lion’s share of the cash required for big-ticket projects.
Ottawa offsets the cost of most projects, but the GNWT is ordinarily obliged to pay for at least 25 percent of any work done.
While the NWT’s infrastructure plans include projects valued at $1 billion or more, like the Taltson hydro expansion and Slave Geological Province highway, they also include simpler items like schools, and water or sewage facilities.
In four sessions, the territory will hear from residents about how the budget could be adjusted to make the numbers work in the years ahead.
There are also two planned invitational sessions which will be “sector-based,” meaning the GNWT will meet with specific groups to discuss concerns and questions in that field.
How the budgets work
The territory has two budgets it must manage every year.
The operational budget deals with everyday programs and services and includes the GNWT’s revenues from all sources. It is much larger and is ordinarily released in February, giving departments two months to get ready for the start of the fiscal year.
The capital budget – which is partially formed out of surpluses from the operational budget – focuses on infrastructure like roads, bridges, and buildings. It comes out in the fall of the year before it is implemented, so departments can ready contracts and supplies for April 1 the following year.
The operational budget must have a surplus in order to ensure there are funds for the capital budget, according to the NWT’s fiscal responsibility rules. Half of the capital budget must come from the operational surplus.
“The challenge, though,” said Wawzonek, “is to maintain revenues and spending so we can deliver programs and services while still having sufficient surplus to provide resources to address all of the capital needs across the territory.”
The 2020 budget included total spending of $1.983 billion and total capital investment of $399 million for a total of $2.38 billion, according to a news release from the GNWT on July 17.
Options to be considered
The NWT will present its budget dilemma to residents in three parts: understanding the relationship between the two budgets, the options available to create revenue, and how spending can best support the growth and future of the territory’s economy.
There are several different options presented. In essence they involve increasing taxes, reducing spending, or coupling those two options.
Another option is borrowing more money, though Wawzonek said “current levels of borrowing are simply not sustainable.”
An example of a tax change could be introducing a two-percent harmonized sales tax, which would generate approximately $20 million in revenue. If this option was selected, prices across the territory may increase by about 1.4 percent.
Each option comes with limitations and associated pros and cons, which the territory said is part of the reason public input is being sought.
The NWT has a small labour force which constrains the territory’s economic growth. Approximately 80 percent of the GNWT’s funding already comes from the federal government.
Will anything actually change?
The input received from the community will be consolidated into a “what we learned” report by the end of August, the territory said.
Wawzonek hopes that report will inform MLAs so they have an idea about the priorities constituents value before passing the budget.
Engaging with residents “should be a foundational element of government budgeting,” the minister said.
“The more dialled-in we are to what’s happening on the ground, and how people feel about those tradeoffs and those balances, I think the better job we are going to do serving everybody.”
An FAQ page will be developed for those who aren’t able to attend the online engagement sessions, to provide a sense of what was discussed and common questions.
Online sessions will take place throughout the week with links to each meeting being posted on the day. The first session will be held on Thursday, July 23, at 7pm.
There is also a survey where members of the public can submit their thoughts.
“The more we hear ideas, the more we engage with the ideas, the more we can actually take those ideas and move them forward,” said Wawzonek.