Dawson City will receive $3.43 million in government debt relief from the Yukon government.

Premier Dennis Fentie made the announcement late Friday afternoon after meeting with the town's trustee and advisory committee.

The much-anticipated financial plan will immediately write off three quarters of the town's $4.3 million-debt.

The remaining $1.5 million in debt will be turned into a 25-year loan with a four per cent fixed interest rate. The loan will be able to be paid back in single annual payments of approximately $94,470.

This is a reduction of $391,130 from the current annual payments of $485,600. It is meant to provide the new mayor and council with flexibility in their cash flow.

'This will provide the tools necessary for mayor and council to operate Dawson City on a daily basis,' Fentie told reporters in Whitehorse during a telephone news conference.

Dawson has been without a mayor and council since April 2004, when mayor Glen Everitt and his council were removed by the government.

In April 2005, a forensic audit of the town said its $4.3-million debt is the result of poorly-managed projects.

'Past governments have made decisions that ensured Dawson City would incur debt,' said Fentie.

The government will also be providing Dawson with $1 million in capital funding to address the town's immediate needs.

The recreation centre and the sewage treatment system, however, will be excluded from the town's financial framework.

'Dawson City simply should not be encumbered with those challenges,' said Fentie, adding his government will take on the projects.

Work on the rec centre has amounted to a 'gong show', said Fentie, adding the current building is so bad people shouldn't even walk into it.

The sewage treatment issue is so huge, he said, it had to be excluded from the fiscal framework of the town.

The government will be exploring options on how to resolve the two matters, but costs that may be involved are not currently available, said Fentie.

Liberal Leader Arthur Mitchell said he is concerned about what Fentie may mean by the commitment on the two projects.

'What unknown financial commitments is he taking on on behalf of all Yukon taxpayers?' asked Mitchell.

The fact the government didn't include Dawson's bailout in the $793 million 2006/2007 budget is also a concern, said Mitchell.

'There's an awful lot of vague promises being made and it raises the question of why some of this wasn't put in the budget,' he said.

Independent Klondike MLA Peter Jenkins, a former minister in the Yukon Party government, said today the government didn't include it because it would have 'tipped off' their plans.

But the government is spending an awful lot of money, Jenkins said.

As of March 31, 2005, the government had spent $3.89 million in Dawson City. Including the financial package announcements, $8.32 million has been spent in the town so far.

Jenkins said he was disappointed the announcement didn't include reference to what will happen with the results of the forensic audit and the RCMP investigation, the town's arena and the secondary sewage system.

'The devil's in the detail,' he said, adding, 'The details are going to still have to be hammered out.'

Fentie and Jenkins agreed the town's reaction to the financial plan has been highly positive.

'We've come to a point where we are now going to move on,' said Fentie.

But NDP Leader Todd Hardy said this is a package that could have been brought forward previously.

'Could this have been done last fall? Could it have been done a year ago? Of course, it could have been. The delay wasn't really necessary,' said Hardy.

Though the financial plan was notably absent from the budget, only minutes after the conclusion of the budget speech on March 30, Fentie announced to reporters Dawson would soon be having an election and a financial plan was on its way.

'Now that an appropriate financial package is in place, Dawson citizens and potential candidates for the next city council can have greater comfort in their community's financial operations,' said Fentie.

The legislature passed the Dawson Municipal Election act last month to allow for a municipal election to be held in the town prior to June 15.