N.W.T. finance minister tables modest $2.2B budget for uncertain times

Amid high inflation, high interest rates and widespread labour shortages, the Northwest Territories Finance Minister delivered a fiscal plan that she says is "responsive and responsible" in these volatile times, and puts the government in better financial shape than when her term began. 

Though her 2023-2024 budget documents reported a territorial economy that has returned to "its pre-pandemic path of slow decline," Caroline Wawzonek expressed optimism.

"There's a lot of numbers that suggest that things are good. We have very strong employment indicators. We still have extremely high wages in the Northwest Territories," she told reporters before tabling her proposed operating budget on Wednesday.

The modest, $2.2-billion budget offers no grand spending proposals, and no new taxes. It does, however, include inflationary increases to property taxes and increases to carbon tax rates. 

The plan also avoids cutting public service jobs or programs and services, said Wawzonek.

This is the last operating budget Wawzonek will present before the territorial election in October. MLAs will debate the spending plan over the coming weeks and vote on a final version before the end of March.

The proposed budget includes $2.48 billion in revenues, $82 million is new spending, and a $178-million surplus that will largely go toward capital projects.

Proposed expenditures are higher than last year's initial spending estimates of $2.1 billion, but slightly lower than what the government believes it actually spent when accounting for flood relief. Revised estimates for 2022-2023 put spending at around $2.37 billion.

Finance officials said flooding in Hay River and the Kátł'odeeche First Nation last spring is expected to cost a total of $175 million, with $62 million of that coming from this year's budget.

More N.W.T. residents employed in public sector than private sector

Though Wawzonek said the future "can be bright," she acknowledged that the economy continues to be "not be particularly diversified." It still relies heavily on the mineral resource industry, while diamond mine closures draw ever nearer.

Wawzonek added that she's "extremely live to the fact" that public sector growth is outpacing private sector growth, which "is not long-term sustainable."

Indeed, budget documents say that there are now more N.W.T. residents working in the public sector than in the private sector — a "significant and concerning development" that began during the pandemic.

The budget anticipates the government's total debt will amount to $1.5 billion by March 31, 2024. That's $65 million more than what was projected for 2022-2023, but still more than $300 million below the territory's federally-imposed debt ceiling of $1.8 billion.

The government previously anticipated exceeding that borrowing limit within four to five years. Finance officials now expect to remain below the debt cap for the next several years. 

"I think we have a much better handle on debt than we did," said Wawzonek, pointing to recent changes to the way the government drafts capital budgets.

The government now budgets less for infrastructure projects, and as a result, it needs to borrow less, said Finance officials.  

William MacKay, the deputy minister of finance, told reporters Wednesday that the government used to put more money toward infrastructure projects than it was able to spend. Now they cap capital spending at $260 million a year, which they say better reflects how much they can actually spend.

Cost of living

The cost of living is an evergreen issue in N.W.T., but rising fuel prices and inflation have made it harder for residents to bear. In Yellowknife, inflation went up nearly 7 per cent in 2022, and another 3 per cent increase is forecast for this year.

Now, carbon taxes are also set to rise, with legislation before the House that would set new carbon tax rates and roll back rebates on heating fuel, in accordance with new federal rules. 

To soften the blow of these changes, Wawzonek's budget proposes $8 million to increase the quarterly cost-of-living offset cheques sent to individuals and families. 

Some MLAs, however, say the government's proposed offset doesn't cut it, and they won't support the bill.

Wawzonek warned that if MLAs vote down the bill, the federal government will impose its own carbon tax system, and "they will return [carbon tax revenue] in whatever way they see fit. Some will presumably go to residents.… I can't predict what they will do necessarily."

Finance officials said this budget proposes to address cost of living pressures in other ways as well, like through increases to income support and student financial assistance.

There's also $738,000 in new money for non-government organizations that deliver programs for the N.W.T. government.

Other spending highlights

Though the pandemic emergency subsided over the last year, N.W.T.'s healthcare system remained hamstrung by staff shortages that forced service cuts across the territory. 

In an effort to remedy this, the budget proposes $10.1 million for efforts to recruit and retain health care staff. 

There's also $11 million for the transition from a pandemic reality, to one in which the COVID-19 is endemic.

In total, the budget proposes an additional $30.9 million in healthcare spending.

Also in the budget is $10.3 million in new money to improve access to childcare and early education, with the aim of bringing childcare costs down to $10 a day by 2026.

Spending on the RCMP is also set to rise, with $5.3 million set aside for police as part of their collective agreement.

The budget also proposes adding $4 million to Housing NWT's core funding; $1.7 million for the Barren-Ground Caribou Calving Survey; $833,000 for community governments to help narrow the community funding gap; and $250,000 for tourism marketing initiatives.