ANALYSIS | Fiscal reality could curb election promises in the N.W.T.

Election campaigns are typically filled with promises, but territorial candidates may have trouble following through on promises that require money.

Government revenues have flat-lined, while spending continues to increase. Consecutive emergency spending forextreme forest fire seasons and low water in the hydro system have forced the government to borrow tens of millions of dollars.

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At the same time, global commodity prices have largely stalled the economic engine of the territory resource development.

Large infrastructure projects, such as the $300 million new Stanton hospital, the $300 million Inuvik to Tuk highway and the $82 million Mackenzie Valley fibre optic line, are sucking up a lot of the infrastructure dollars. The cost of those projects will be dwarfed by another that is now undergoing an environmental review: the proposed Mackenzie Valley highway has an estimated cost of $700 million.

After the coming election, the new batch of MLAs will be briefed on the financial situation they've inherited.

"If there is a desire by the18thassembly to increase infrastructure investment or spend in other areas, such as health care, we will need to present them with options on how we will be financing that over the next four years," said SandyKalgutkar, assistant deputy minister with the Department of Finance.

Revenuedown... spendingpressure up

In his last fiscal update, Finance Minister Michael Miltenberger talked about the dilemma being faced by the government.

"We need to make investments in our economic future now by ensuring our territory is attractive and welcoming to potential investors," said Miltenberger. "Infrastructure investment can help encourage resource exploration and development and we need to position ourselves to capture the benefits of a global economic recovery. However, our projected revenues are flat and our existing expenditure pressures continue to intensify."

The finance minister went on to rule out increasing taxes, saying it would drive up the cost of living and discourage investment. He also ruled out borrowing to pay for new infrastructure, saying additional debt repayments could easily push the government into a deficit situation.

The government's fiscal responsibility policy dictates that half of all infrastructure projects must be paid by through budget surpluses. No more than half of them can be financed through borrowing.

Doom and gloom for bargaining leverage?

But the union that represents many government workers is taking Miltenberger's analysis with a grain of salt.

The Union of Northern Workers sees it as an attempt to gain an advantage in the re-negotiation of the government's two biggest collective agreements. Contract negotiations are now underway for workers of the Northwest Territories Power Corporation, and the contract governing unionized GNWT employees expires on March 31.

"I'm sure a part of it is painting doom and gloom there so that you'll be happy that you have a job with a zero per cent increase and not being concerned about a layoff and be happy with that," said UNW president Todd Parsons.

But there's no question the size of the territorial government has continued to increase even during a time of restraint in many other sectors. Operational spending (which does not include infrastructure) has increased 54 per cent over the last 10 years and a whopping 117 per cent over the last 15 years.

Rising cost of government

Total Operating Expenses(millions of dollars)

• 2005-06: 107
• 2012-13: 144
• 2013-14: 150
• 2014-15: 169
• 2015-16: 165

Total Revenue (millions of dollars)

• 2012-13: 165
• 2013-14: 163
• 2014-15: 184
• 2015-16: 183

Total positions All* Departments only

• 2012-13: 4,983 2,396
• 2013-14: 5,034 2,447
• 2014-15: 5,375 2,831
• 2015-16: 5,448 2,888

* Includes boards and agencies.

NOTE: Devolution came into effect April, 1, 2014, adding263 positions.