Agreed.
Thank you, committee. Bill 1, An Act to Amend the Legislative Assembly and Executive Council Act, is now ready for third reading. Does committee agree that this concludes our consideration of Bill 1, An Act to Amend the Legislative Assembly and Executive Council Act?
Agreed.
Thank you, Ms. Cleveland, and our thanks to your witnesses. Sergeant-at-Arms, please escort the witnesses from the Chamber. Committee, we have agreed to consider Tabled Document 5-19(1), Supplementary Estimates (Operations Expenditures and Borrowing Authorization) No. 3, 2019-2020. Does the Minister of Finance have any opening remarks?
Yes, Madam Chair.
Does the Minister -- oh, sorry. Minister of Finance.
Thank you again, Madam Chair. I am here to present the Supplementary Estimates (Operations Expenditures and Borrowing Authorization) No. 3, 2019-2020. The supplementary estimates document consists of two items, as follows:
$4.5 million for the Department of Municipal and Community Affairs for increased grant-in-lieu of property tax payments to municipal taxation authorities under the Grants-in-Lieu of Property Taxes Policy. This increase is the result of increases to the assessment values for the City of Yellowknife. A significant portion of the increase is due to the new Stanton Territorial Hospital coming into service, which makes up $3.5 million of the amount being requested. The Grants-in-Lieu of Property Taxes Policy recognizes that, unless property is exempt from taxes, the government is expected to pay compensation for municipal services provided to the Government of the Northwest Territories by community governments, and that properties should be assessed by the same methods as those used for privately owned property.
$135 million to increase the government's short-term borrowing limit for 2019-2020 fiscal period from $390 million to $525 million. The proposed increase is required to ensure the government has the borrowing authority to meet its projected cash flow requirements to the end of the 2019-2020 fiscal period that, based on current cash flow projections, are at risk of exceeding the current approved limit.
The increased short-term borrowing limit set out in this supplementary estimates document will stay in effect until March 31, 2020. As part of the development of the 2020-2021 Main Estimates, an updated borrowing plan that reflects the borrowing requirements for the government for the 2020-2021 fiscal period will be provided for review and approval by the Legislative Assembly.
The Department of Finance recognizes that departments need to prepare their budget estimates knowing that there are items that are difficult to accurately estimate, and for which supplementary funding may be required. One example of this is forest fires, where the financial impacts of a fire season are not known up front.
That said, the Department of Finance is conscious of the need for us to work to close the gap between what is budgeted for a fiscal year and the total appropriations needed during the year. One measure that is being implemented for this reason going forward is the requirement that departments will prepare four-year business plans.
We will also re-profile a position within the Department of Finance to better support review of cash flow, and to follow up and monitor all invoices, including those outstanding from other departments. The Department of Finance will continue to work with all departments to support and improve fiscal responsibility.
That concludes my opening remarks, and I would be happy to answer any questions that Member may have. Thank you.
Thank you, Minister. Does the Minister of Finance wish to bring witnesses into the House?
I do, Mr. Sandy Kalgutkar and Mr. Jamie Koe.
Thank you. Sergeant-at-Arms, please escort the witnesses into the Chamber. Would the Minister please introduce the witnesses.
As mentioned, this is Mr. Sandy Kalgutkar, deputy minister of Finance, and Mr. Jamie Koe, whose title has just changed, deputy secretary (Board of Management.
I will now open the floor to general comments. The Member for Kam Lake. No? Sorry. Seeing no further general comments, we will review supplementary estimates by department. The committee has agreed to begin the review with the Department of Municipal and Community Affairs. I will now open the floor to general comments on the Department of Municipal and Community Affairs. Member O'Reilly.
Thanks, Madam Chair. I'm just wondering if I can get an explanation as to how the Department of Municipal and Community Affairs would miss that the Stanton Hospital would come online and didn't budget for this. Thanks, Madam Chair.
Minister of Finance.
Thank you, Madam Chair. Unfortunately, I may not have a fully satisfactory answer for the Member insofar as the simple reality is that, obviously, one can assume or one knows that an asset will come into play and will need to be budgeted for the year that the asset is completed or is in service. Obviously, one could assume that you would know that the hospital that was being built would come into service during this particular year. That said, there were uncertainties as to the exact timeline of the hospital and uncertainties as to the final total of the hospital, and so, again, while I can't speak to the internal budgeting that was happening in the Department of Municipal and Community Affairs, I can say that the uncertainties there were real and, in that sense, it wouldn't be uncommon for there to be some delay that may not have been included in the original budgets, that they would be appropriately part of a supplementary bill.
It is unfortunate that they weren't budgeted for internally so that we aren't coming at this stage of the matter, but the best I can do in the situation that I am in, quite closely on the heels of the election, is to have caught this fact when we did and to do what we could to take the steps that we could here and today and obviously, in the very first sitting in the Assembly, in order to go forward in a way that is fiscally responsible and that helps this department get itself back on track for the remainder of the fiscal year.
Thank you. Mr. O'Reilly.
Thanks, Madam Chair. I appreciate the Minister is new to this file, but I can assure the Minister I sat in the House in the 18th Assembly, and we knew months in advance of the day that the new hospital was going to open on May 26, 2019. That was the scheduled date for months before that, and it must have been known to the Municipal and Community Affairs officials as well. How is it that our system failed to flag this and that the city was going to provide the assessment and that we would have to pay that to the City of Yellowknife? Thanks, Madam Chair.
Minister of Finance.
Thank you, Madam Chair. I acknowledge the Member's comments, and, certainly, to the extent that there needs to be a better review, we certainly share that. It doesn't eliminate the fact that, unfair, unfortunately, we are at a situation now that the Minister of Municipal and Community Affairs, MACA, does not have this money available to it within its budget, short of the current supplementary bill that is for consideration at present.
The Department of Finance is going to be working with MACA to the extent possible to help ensure that mitigation measures or that better measures are in place to monitor the cash flows that are happening, to better plan, and to better estimate the final values on assets as they are becoming available so that we don't wind up back in a similar situation and so that there is a better ability to track incoming assets and relying on perhaps more than one check and balance within the bigger system of the finance of the GNWT.
Mr. O'Reilly.
Thanks, Madam Chair. Can someone tell me: when did we get a tax assessment that was from the City of Yellowknife for the Stanton Hospital? Thanks, Madam Chair.
Minister of Finance.
Madam Chair, I am told that would have been approximately fall of 2019.
Mr. O'Reilly.
Thanks, Madam Chair. "Fall of 2019," can we get a little more precision to that? Was it September?
Minister of Finance.
I just want to clarify, Madam Chair, when the city bill was received generally.
Mr. O'Reilly.
Thanks, Madam Chair. Look, I am a taxpayer here in Yellowknife. We receive an interim notice, I think, pretty early in the calendar year, and then we get a final notice usually around June, if my memory serves me correctly. I am just wondering: when did MACA get the notice of taxation, and why did it take from the time of the notice until now before the supplementary appropriation came forward? Is this something that could have or should have been dealt with in the last Assembly? Thanks, Madam Chair.
Minister of Finance.
Yes, Madam Chair, thank you. I am just conferring and agreeing with Mr. Kalgutkar that, from the perspective sitting here, from Finance, is that quite certainly, yes, the matter should have been a supplementary appropriation in a fall session. Obviously, there wasn't a fall session, and, unfortunately, that puts us here at this session. It is not arriving in the timeliest of fashions, at least from the perspective of the present witnesses here and myself. It is here as quickly as I believe we were able to bring it here.
Mr. O'Reilly.
Thanks, Madam Chair. Okay. Maybe I can just get the Minister to agree that she will find out what that date was and give me and the Members of this House the chronology of events around this misstep or failure to budget properly for the tax bill from the city. Thanks, Madam Chair.
Minister of Finance.
Thank you, Madam Chair. Madam Chair, I am hesitant always to put other departments on the spot, but I would certainly expect that we likely have that information within Finance, and so, to the extent that I can provide some further chronology on when that taxation information was received, the Department of Finance will certainly endeavour to see what information we have .
Mr. O'Reilly.
Thanks, Madam Chair. Great, okay. I look forward to getting that information, and I just assume that you folks are all working together, so you are going to get it from your colleague. Now that we have dealt with what happened, how are we going to prevent this from happening again in the future? Thanks, Madam Chair.
Minister of Finance.
Thank you, Madam Chair.
Sorry, Madam Chair. I apologize for the delay. Madam Chair, there are steps underway. Certainly, the reaction that the Member is having perhaps to this is not dissimilar to the reaction that has already been had to the situation that we are in, so there is some shared frustration, I am sure, by all Members. The Department of Finance certainly intends to work more closely with the assets that are coming online in the future to ensure that they are being adequately budgeted for at the front end, that they are adequately planned for, and so that dates are known, as far as they can be, and so, when there is an asset that we know is coming online, we are not in a situation of dealing with it after the fact and not at the front.
I would hope that there will be a closer working relationship between MACA, Infrastructure and the Department of Finance to ensure that, indeed, when an asset is on the list and expected as part of the capital projects, for which there is clearly a plan, that then we can make sure that that is part of the budgeting process, as well.
Mr. O'Reilly.
Thanks, Madam Chair. I would like to know what measures or were there any opportunities within MACA or what contingencies did they look at before coming forward with a supplementary appropriation? Were they able to find the money internally? I think the budget of the Department is around $55 million or something. Were there any opportunities to make up the money internally, and what was looked at? Thanks, Madam Chair.
Minister of Finance.
Thank you, Madam Chair. Again, the only reason that the Department of Finance has received in terms of when we evaluate a submission like this coming forward, certainly, is that there wasn't a lot of flexibility at this stage of the fiscal year remaining for MACA and that, at this stage of the fiscal year, they had already used up a lot of their available room in terms of their support for community governments and grants-in-lieu, et cetera, so, while certainly in their total budget, there might have been some flexibility. Being where we are now here in the fall, late fall, there was limited flexibility to cover what was a fairly significant amount owing to a municipal government. Thank you, Madam Chair.
I will move on to the Member for Hay River South, Mr. Rocky Simpson.
Thank you, Madam Chair. The tax bill there for Stanton is quite substantial, and I see that the property, it says here, is that you, in your statement, is it is assessed by the same methods as those used for privately owned property. Am I correct in saying that MACA is the one who does the property assessments?
Minister of Finance.
Thank you, Madam Chair. Not entirely. I think it may depend on each municipality. In this particular instance, MACA and the municipalities do work together to have an assessor who comes in and does the assessments, so it is not accurate. I apologize if I said that it is not accurate to say it is done exactly the same as a private property would be made. The grants-in-lieu is part of a Government of Northwest Territories policy, and so MACA follows the policy in order to ensure that the grants-in-lieu are paid properly to the municipal governments, as is required by that policy.
Member for Hay River South.
Thank you, Madam Chair. If they are following, I guess, the same methods as those for privately owned properties, would it not follow, then, that in Hay River I see property values down? I am not sure what it is like in Yellowknife, but would it not follow that the government would take a look at that assessment and look at whether it should be challenged? If we are following it like privately owned properties, the government should have the same right to challenge the assessment, as well. What has that done?
Minister of Finance.
