Funding fiasco averted … for now

It was almost a tight fiscal year for Yukon municipalities. Saturday, the municipalities learned they wouldn't be strong-armed into a quarterly funding scheme by the territory.

It was almost a tight fiscal year for Yukon municipalities.

Saturday, the municipalities learned they wouldn’t be strong-armed into a quarterly funding scheme by the territory.

Yukon communities were handed an exemption for 2010. But future municipal funding is still up in the air.

In February, the communities learned their comprehensive municipal grant would no longer be delivered in one lump sum. Instead, they would get their cash doled out in four separate payments.

It was an announcement that came too quickly for some smaller Yukon municipalities.

They need more money in April to pay for capital projects that can only be built during summer months, said Watson Lake Mayor Richard Durocher.

“The reality is that we couldn’t afford it,” he said. “We need all our funding April 1st.”

If Watson Lake were to receive quarterly payments from the territory, it would have to dip into its reserves or cancel potential projects, he said.

“It would have put the brake on things we need to do as a municipality.”

It’s a similar situation for Dawson. There, the town needs at least 70 per cent of its funding in April to stay afloat, said Councillor Wayne Potoroka.

There’s also the issue of interest.

If money is sitting in territorial banks rather than municipal coffers, who is benefitting? asked Haines Junction Mayor George Nassiopoulos.

“We’ve made as much as $70,000 in the past (from interest),” he said.

“That’s a significant hit for a small community considering that makes up about six or seven per cent of our yearly revenue.”

The situation isn’t as dire for Haines Junction as it is for other communities, said Nassiopoulos.

The town would still be economically viable if they got quarterly installments of the municipal grant.

The same goes for Mayo, said Mayor Scott Bolton.

But one thing the municipalities agree upon is that the reasoning behind the quarterly funding decision was pretty thin.

“The (funding) changes weren’t well communicated by the Community Services Department, even though we have a great relationship with them,” said Potoroka.

“They seem equally baffled as we are by all this.”

Bolton said he’s still “trying to figure out why they’re doing this.”

And Durocher found the reasoning “kind of odd” and questioned why his community was “having to suffer the wrath of this.”

Community Services learned about the policy from the Finance Department in February 2009, but officials were never given any reasons for the proposed changes.

“It’s a way of accounting and controlling for expenditures of municipalities,” said director of community affairs Christine Smith.

“But as for the reasoning, I honestly don’t know. We’re also looking for those answers.”

The directive came from Canada’s auditor general and an internal audit in 2007, said David Hrycan, deputy minister of Finance.

It applies not only to municipalities, but to all nonprofits and organizations that receive yearly government funding.

“It’s just not good business to give money in advance of need,” he said, using a mortgage analogy to explain the situation.

“If you needed $300,000 for a home, you wouldn’t get all the funding on day one.”

But municipalities wanted to be a part of the discussion when the policy was being worked out in 2008.

“When the policy was contemplated they didn’t take time to consult with us,” said Potoroka.

“At the (Association of Yukon Communities) AGM (in April) we’ll have an opportunity to talk to the finance people.”

The issue came up at a breakfast meeting Tuesday to unveil the territorial budget to the business community.

Community Services Minister Archie Lang is working on the issue, said Premier Fentie in response to a question from city councillor Doug Graham.

The association has already drafted up a resolution calling on the government to return back to yearly lump payments, rather than quarterly installments.

That resolution will be talked about at the upcoming AGM.

“The message has been loud and clear that this is unacceptable,” said Durocher.

“I feel confidant the issue will be dealt with.”

Contact Vivian Belik at

vivianb@yukon-news.com

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