"This is a budget, clearly, that is focusing on replenishing, stepping back, recalibrating," Finance Minister Michael Miltenberger told reporters before delivering the budget speech in the legislature Thursday.
"We were heavily focused on infrastructure. Now we have to hit the reset button."
Miltenberger's budget forecasts a narrow $74-million surplus on expenditures of $1.4 billion. It contains no new taxes or program cuts, and keeps spending increases under four per cent.
It also caps infrastructure spending at $137 million — a drastic cutback from the $1.1 billion the territory has spent over the last three years. That spending has driven the N.W.T.'s total debt to $656 million, a figure that Miltenberger said needs to fall before the territory can fix and expand any more roads, schools, airports and other public facilities.
The budget, part of a long-term plan for the territory, is designed to buy the government a little time before it starts spending again.
"This is the first of four budgets," said Miltenberger.
"This year and next year the watchword is going to be fiscal discipline. (We'll) replenish the cash reserves and lower our expenditures to do that. Year 3 and 4 we're fully planning to come out with a budget that will allow us to enjoy the hard work of year 1 and 2."
The territory's infrastructure shopping list has been put as high as $3 billion. It includes items such as a fibre-optic line linking communities along the Mackenzie Valley and an all-weather highway from Inuvik to Tuktoyaktuk, which would be the first road connection between southern Canada and its Arctic coast.
The government is also investigating projects such as hydroelectric developments, which would lower power costs for industry and consumers in a territory that now depends largely on diesel generation.
This year's surplus, if realized, would go into that fund. The territory is also likely to have an extra $60 million to spend as early as next year, once a deal is finalized for Ottawa to transfer some resource royalties to Yellowknife.
However, future operating surpluses will be tougher to come by.
While government revenues are anticipated to increase by nearly 10 per cent this year, they are expected to return to historic levels of about one-quarter of that in the following years. The territory continues to receive about three-quarters of its revenues from federal transfers.
In his speech, Miltenberger also touted the return of industry to the N.W.T. after two years of disappointing activity — although budget documents suggest the rate of investment is below that enjoyed by other Canadian jurisdictions.
The territory's financial policy allows the government to borrow for capital expenses, not operating costs. At least half of all new infrastructure investments must be paid for with cash generated by budget surpluses.
The N.W.T. enjoys an Aa1 credit rating, one of the best ratings of any government in Canada.
— By Bob Weber in Edmonton
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