If I may, Mr. Speaker, I wish to announce two new policies which will govern the operations and capital funding programs of the Department of Municipal and Community Affairs for municipalities in the Northwest Territories.
The municipal capital and municipal operating assistance policies are comprehensive in scope and significant to Northwest Territories' municipalities. We have held lengthy discussions and consulted widely with municipal leaders in developing these policies.
In 1989, a discussion paper on financing municipal governments was tabled in this Legislative Assembly, outlining options for funding municipalities for capital, operations and maintenance. This paper represented the culmination of work initiated in 1986 to consolidate the many programs of assistance and was intended as a starting point for discussions with municipal leaders.
Early in 1990, at the request of the NWT Association of Municipalities, the department agreed to form a joint committee to review the various proposals in the discussion paper and to make recommendations on preferred funding approaches. The committee's recommendations were submitted to my predecessor, the Hon. Tom Butters, in early 1991. Building on the original discussion paper and the joint committee's recommendations, the department drafted two policies: one for capital and one for operations funding, which were, then, further reviewed by municipal leaders at a series of regional conferences and discussed by the membership at the last two annual meetings of the NWT Association of Municipalities. Final policy proposals were improved and brought to cabinet for approval.
Mr. Speaker, our municipal leaders were unanimous that current programs of assistance were confusing, with a number of different standards, criteria and rules; lacked the certainty of funding communities sought; did not promote the degree of local authority and autonomy that communities desired; and were often unfair in the distribution of funds.
The new policies are built on principles that address these problems. These policies are sensitive to the fiscal constraints of both this government and the municipal level of governments. They promote efficiency and effectiveness, encourage local revenue generation, and recognize varying costs of doing business in communities and varying abilities of communities to contribute to programs or projects. Above all, these new policies are equitable and equal in their application between the largest and the smallest municipalities Municipal Capital Assistance Policy
Mr. Speaker, I wish to highlight the central features of these two important policies. The municipal capital assistance policy governs all department capital programs and builds on and expands the policy approved in principle by cabinet in 1987.
M-CAP, as we call it, provides for communities to assume greater authority over capital projects. Consistent with many of the recommendations of the standing committee on finance, municipalities can enter contribution agreements with the department for full or partial control of capital projects and programs, or, when implemented, a degree of capital block funding. All communities are treated equally with this provision and may exercise varying degrees of control over a project, dependent on their willingness and ability.
Mr. Speaker, not all communities are equal in the costs they face and their ability to contribute to projects. A northern cost index in the policy recognizes varying costs, and fair and reasonable criteria have been developed to determine the relative ability of communities to contribute. Dependent on a municipality's ability to contribute, different contribution requirements for projects are set.
The department also recognizes that it cannot meet all the needs of all the communities. Facilities and other capital infrastructure have been classified as basic, meeting the core needs of municipalities, or additional, meeting other needs. Priority will be given to meeting basic needs, consistent with the recently passed motion of this Assembly during the review of the department's 1992-93 capital budget.
Municipal Operating Assistance Policy
On the other hand, Mr. Speaker, the department will implement the municipal operating assistance policy on April 1, 1992. This policy governs equalization payments for the seven tax-based municipalities and operations funds for 39 other communities, including all hamlets and several designated incorporated settlements.
Equalization payments will be distributed according to a new formula. This formula includes a northern cost index that recognizes the varying cost of providing government services among the seven tax-based municipalities. As well, the formula no longer includes a factor for municipal expenditures, which tended to favour, in the distribution of funds, those municipalities that spent more. While the total amount of funds for the tax-based municipalities does not change, the new formula will redistribute on a basis that fairly equalizes the resources for communities. Other provisions of the new policy will allow block operations and maintenance contribution funding to these tax-based municipalities.
Credit Units Formula
Mr. Speaker, the previous funding distribution formula had a number of serious shortcomings and was not equitable. As a result, a much improved credit units formula has been developed. The formula also includes a northern cost index that recognizes that the costs of government services vary from municipality to municipality. The formula is also sensitive to population and the extra demands increased population places on municipal government.
Perhaps the single, most significant feature of the credit units formula is that it recognizes all the major functions of a government and applies a number of indices to each functional area to determine the relative cost of these services. The old formula fell far short in this regard, using only a select few functional areas of municipal government and a series of standard factors which had questionable value in determining a community's fair share of the available funds. Functional areas such as recreation, community planning and land administration are now included in this new formula.
The old formula used estimates to determine the funding a community would receive for operating its buildings. Actual fuel and power costs for these buildings, averaged over three years, will be used in the new formula, ensuring the fairest and most accurate recognition of costs.
Mr. Speaker, as I noted at the outset, these new policies do not mean new money, but a fairer distribution of that funding the department has. Redistribution means some communities will receive a greater share of the funds available, other communities a lesser share. To ensure that communities can adjust to these new levels of funding with minimal disruption, both the redistribution of equalization and credit units formula funding will be phased in over four years, thereby minimizing actual increases or decreases in any one year. As well, the department will work closely with those communities where funding is lessened to provide any support or assistance required. Later this session, Mr. Speaker, I will be tabling both the municipal capital and municipal operating assistance policies.
In conclusion, the new policies are a significant improvement in how the department finances municipal government. We now have a single comprehensive and consistent approach built soundly on fundamental principles, with formulae that accurately reflect the relative costs of municipal governments and fairly distribute available funds. Municipal leaders have waited many years and contributed significantly to these new financing policies. Qujannamiik.