The territorial government can tap into hundreds of millions of dollars in federal infrastructure funding over the next 10 years, but it may be more than Yukon can handle.

That's what Currie Dixon, Yukon's Community Services minister, told municipal leaders at an annual meeting over the weekend.

Infrastructure was on the minds of mayors and councillors at the Association of Yukon Communities general meeting in Watson Lake Friday, Saturday and Sunday.

Scott Bolton

Mayo's Mayor Scott Bolton says small Yukon communities could not afford to provide basic services without outside infrastructure monies. (Dave Croft/CBC)

The host, Mayor Justin Brown, said Watson Lake has just completed building a $5.75 million water treatment plant thanks to funding from the federal and territorial governments. It needs millions more to finish replacing aging underground water pipes.

Likewise, the community of Mayo is expecting to receive around $2 million to replace its water reservoir, said Mayor Scott Bolton.

With about 500 residents, Bolton said the community does not have the tax base to pay for large projects like the water reservoir, but it's vital to daily life in Mayo.

"It means you turn on the tap and not think twice about the water you're drinking, which is pretty important nowadays," he said.

New infrastructure fund

Dixon told the municipal leaders that the federal government has created a new infrastructure fund specifically for water-related projects. With a mandatory 25 per cent contribution from the territorial government, he said that means there's $68 million available for Yukon over the next four years.

Currie Dixon

Community Services minister Currie Dixon says there are many needed projects, but Yukon may not have the capacity to handle all of the federal infrastructure money that's available. (CBC)

The Building Canada fund, with the territorial contribution, provides for an additional $342 million over the next 10 years. The territory also receives about $15 million per year from federal gas tax revenue.

Dixon said there is no shortage of projects needing money, but the Yukon may not have the capacity to take advantage of every dollar that's made available.

"That will test the limits of our capacity, of our builders. It will test the capacity of our government to manage those projects and it will also test our wallets," said Dixon.

He said the government typically spends $20 to $30 million per year on this type of infrastructure spending. In order to take advantage of all of the federal funding available, that would have to rise to $50 to $60 million per year. 

"When the feds create so many new infrastructure funds that require money from the territorial government, it makes it difficult for us to keep up," Dixon said.

Will not go into deficit spending

The territorial government will not go into deficit spending to pay for infrastructure projects, Dixon said.

Mayo's Bolton supports a cautious approach to spending. 

He said neither the communities nor the territorial government can afford to take on debt. Local governments also have to be careful about building facilities they can't afford to operate.

"The things that we really need to build communities and make them sustainable is important, but not at the cost of our futures."

Tone at odds from northern premiers message?

The cautionary tone from Dixon and Bolton was not matched, however, by Yukon Premier Darrell Pasloski in April when he joined other northern premiers in demanding more infrastructure money from the federal government at a meeting in Dawson City.

For now, the priority for any infrastructure spending has been given to projects to bring municipal services into line with federal and territorial regulations and to core services like drinking water and solid waste management.

But Dixon said that with more money available, the government may consider funding recreational projects.