The Carcross Tagish First Nation says Ottawa is threatening to cut its funding because the First Nation will not sign its financial transfer agreement.

The deal came with the First Nation’s self-government agreement.

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Dan Cresswell, the chief of the Carcross Tagish First Nation, said if their funding is cut off, it will effectively throw the First Nation into poverty. (CBC)

Chief Dan Cresswell said that deal was negotiated by the first groups to sign on to land claims. He said that by the time Carcross signed on, the funding levels were already 10 years behind and had not been updated.

Cresswell said they put the government offer to their people in three different votes.

"The only mandate that came out of there, they said, 'If we're treated equal we want to be equally under-funded. We don't want to be more under-funded than the other First Nations'," he said.

The First Nation says if they are stripped of their funding, it will effectively throw them into poverty.

Cresswell said a federally mandated review of the agreement showed First Nations are underfunded between 50 and 114 per cent for the programs, compared to other governments.

He said because Carcross signed its deal so many years later, it is funded about $1.6 million less per year than other self-governing Yukon first nations.

Cresswell said if the deadlock is not resolved, funding for them will end October 1.

There are 11 self-governing first nations in Yukon.