Territories surprised by large funding cuts by federal government

Territorial premiers have asked Ottawa to reverse a surprise funding cut that could trim hundreds of millions of dollars from already-tight budgets.

“I’ve asked Canada to reconsider,” said Yukon Premier Darrell Pasloski.

“Getting this notification at this time when we’re already in the budgeting process is unacceptable.”

Earlier this month, the premiers of Yukon, the Northwest Territories and Nunavut learned that Statistics Canada had changed how it calculates territorial expenditures. The result was a two-per-cent cut to the base funding the federal government provides to the northern jurisdictions.

“The fiscal impact of the technical changes was not anticipated by the territories or the Government of Canada,” said Northwest Territories Premier Bob McLeod in a statement.

Yukon will lose about $23 million. The N.W.T. will see $34 million less and the impact on Nunavut has been estimated at $50 million.

Worse, Pasloski said, those cuts are to annual grants, meaning they will go on affecting the North for years to come. Yukon, in the second year of a five-year funding agreement, stands to lose about $100 million if the cuts aren’t reversed.

“For a jurisdiction with a small budget, it’s significant,” he said.

“This is part of our base funding. It affects health care, education, tourism, job creation.”

The premiers have met with federal Finance Minister Bill Morneau. Pasloski said the minister has promised to look into it and get back to them by mid-March with an answer.

That’s not soon enough to save this year’s budget, Pasloski said.

“We have to go forward at this assuming in our budgeting process that we have $23 million fewer dollars in our budget.”

The premiers say the affected grants were designed to the stable and predictable to allow the northern governments to plan. Allowing the cuts to stand would break that understanding, they say.

“This violates those principals,” Pasloski said.

A spokesman for Morneau’s office was not immediately available for comment.

— Follow Bob Weber on Twitter at @row1960