The federal government has loosened its belt on the amount of transfer payment dollars the Yukon will receive in the upcoming fiscal year.

In the House of Commons Tuesday, federal Finance Minister Bill Morneau said steps will be taken to address the impact caused by recent changes to the Territorial Formula Financing (TFF) agreement.

The change to the way the TFF is calculated indicated that the Yukon would lose $23 million in federal transfer payments for this year’s territorial budget.

Now, $16.5 million will be restored to this anticipated loss – bringing the total damage to about $6.5 million.

“At the December meeting of Canada’s Finance ministers, we promised to work with the territorial governments to identify options for addressing the impact of recent data revisions on territorial financial planning,” Morneau said.

“Working with the three governments, and thanks to the tireless advocacy of the members of Parliament for all three territories, I am pleased to bring forward a solution that will not only help mitigate the effects of this data revision in the immediate term; it will also improve and strengthen the program over the long term by making Territorial Formula Financing payments more stable and predictable going forward.”

“Does a shortfall of $6.5 million sound better than $23 million? Yes – but a cut is still a cut,” Premier Darrell Pasloski told the Star Tuesday.

“We’re now having to work with a budget that’s significantly less than we had anticipated.”

“It is disappointing that Yukoners will still bear the brunt of a funding cut from Ottawa,” the premier added in statement.

In December, when the Yukon government learned its allowance from the federal government would be $23 million less than expected, it called upon the powers that be to fix the issue.

Pasloski had face-to-face meetings with Morneau and Prime Minister Justin Trudeau.

Yukon cabinet ministers also raised the issue with their federal counterparts when they were in Ottawa recently for Yukon Days.

The proposed legislative amendments will enable the government to recalculate the 2016-17 payments.

While the lessened amount of loss is positive, the premier disagrees with any changes made in the middle of an agreement.

“When we negotiate a new arrangement would be a good time to do this,” he said.

Currently, the territory is in year two of a five-year contract with the federal government. This provides the territorial government with an unconditional annual grant.

Despite a lower number for this year, it’s not to say the territory is lacking federal funding.

In the first year of the five-year agreement, Yukon received $851 million.

This year, the amount received was $874 million. These amounts have risen substantially every year since 2007, where the Yukon received $544 million.

Under the previous method of calculating, the government anticipated a handout of $901 million for the upcoming 2016-17 budget.

The territory’s financial planning relies heavily on the TFF – in 2015-16, it represented 70 per cent of the Yukon’s finances.

Pasloski said the cut reveals a larger lesson.

“Here is one of the reasons why, as the premier, I’ve been saying now for four years, a long-term vision for our territory should be to get to a place where we can pay our own way, where we don’t rely on Ottawa,” he said.

“Then we can’t have somebody coming up to us and saying, ‘We’re going to give you less money.’”

The premier added that his government has already started to think about this when making decisions.

Pasloski and cabinet ministers have already started hosting public discussions around the spring budget.

“We’re still going to go forward with our budget planning process,” he said.

“Understanding the situation we’re in financially, we’ll come forward with a budget, (but) we’re still in a good place.”

Pasloski was not able to comment at this time as to which departments will see budget cuts totalling $6.5 million.

“It’s not specifically earmarked,” he said.

Yukon MP Larry Bagnell praised Morneau’s announcement.

“I am proud to be a part of a government that is dedicated to investing in Canada’s North as it grows and prospers while taking on more power and responsibility for its future,” he said in a statement.