"We are approaching the edge of a cliff and our challenge is to ensure that we do not go over," Finance Minister Michael Miltenberger said in his budget speech to the N.W.T. legislature Thursday.
Miltenberger tabled a budget that projects another small surplus of $147 million on stable expenditures of about $1.6 billion. He expects a final accounting to show the economy grew by 5.2 per cent this year and projects another 3.7 per cent in 2015-16. The territory maintains a solid Aa1 credit rating.
But a fiscal blizzard is darkening the N.W.T.'s future.
This year is expected to be about as good as it gets for the next while. Revenues are now forecast to grow by less than half a per cent in total by 2019. Meanwhile, even with tight spending controls, expenditures will have grown by more than eight per cent.
At the same time, the territory's population is shrinking, which hurts both the government's ability to raise revenues and reduces its grant from Ottawa.
"Clearly, this is not sustainable," Miltenberger said in his speech.
The territorial government hopes the answer is to get things moving again.
It has set a goal of increasing the N.W.T.'s population by 2,000 over the next four years. That would be about a five per cent increase over its current 44,000 residents.
To help with that, the budget earmarks about $4 million for measures to reduce the price of energy and lower the cost of living for northerners.
The big ticket is a request to the federal government to more than double the territory's legal borrowing limit to a total of $1.8 billion.
That extra money would be used to help start the long-desired Mackenzie Valley highway project, a $1.7-billion megaproject that would put an all-weather road northwest from Yellowknife to Inuvik near the Beaufort coast. That would open up road access to a vast swath of tundra now accessible only by ice road or air, dramatically reducing costs for residents and resource companies.
The central Mackenzie is known to hold significant oil and gas reserves as well as minerals.
The territory also wants an all-weather road into the mineral-rich tundra north of Yellowknife.
"We see very, very clearly that we need to build the infrastructure that's going to promote economic development, which is going to lead to employment, taxes, all the good things that will affect some of the other broader social issues," Miltenberger told reporters.
The 2015-16 budget is also the first to include resource royalties, recently devolved to Yellowknife from Ottawa.
The N.W.T. expects to retain about $30 million in its heritage fund and operating budget from those royalties. Aboriginal governments are to receive about $10 million.
Despite the daunting challenge, Miltenberger expressed optimism as he spoke before tabling his seventh budget.
"We have a chance to build a territory," he said. "There's enormous opportunity."
— By Bob Weber in Edmonton
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