The province says it won't take over the daily operations of Pine Falls despite a formal request from town council to do just that.
But the province is willing to help the town plan for an uncertain financial future, Manitoba Local Government Minister Ron Lemieux said.
In response, town councillors said that's enough for now but they still might decide to try to force the province's hand if they don't get what they want.
Lemieux said Friday the best solution might be to amalgamate Pine Falls-Powerview with the neighbouring RM of Alexander under the terms of Bill 33.
Bill 33 would see municipalities with a population of under 1,000 merge with larger ones to reduce the cost of local government. Affected municipalities would have to submit merger plans by Dec. 1.
Both Pine Falls and the RM of Alexander have populations over 1,000 so they don't fall into the mandatory merger plan.
In this case, Lemieux said merging Pine Falls-Powerview with the RM of Alexander would have to be voluntary. It appears the town is willing but the RM is not, he said.
"They should consider amalgamating," the minister said. "They're over the population threshold so it's something that would be (voluntary) and I'm going to raise it again and have my department raise it with the RM of Alexander."
In a statement late Friday, Mayor Gord Watson and the Pine Falls town council said the minister's intervention has delayed their mass resignations.
In a one-page statement, the council suggested an amalgamation might indeed be the solution and a threat of a mass resignation might be the best way to force it.
"Debt load skyrocketed to $2 million just as property tax assessments nosedived. The burden of tax shifted from industry to the residents of Pine Falls," the statement said. "Council believes a financial crisis is imminent. They also know the province can force an amalgamation if that is in the best interests of residents."
Town council's job is to persuade the province they are in crisis, and if they can't the council will resign, the statement said.
"Council does not view this action as quitting. They believe this is an all-out effort on their part to get some help," the statement said.
The mayor could not be reached for further comment.
Lemieux said he was able to reach Pine Falls deputy mayor Bev Dubé Friday morning and the two agreed to a meeting to discuss options.
"This morning I made a commitment to the deputy mayor. We are going to meet face to face and we're going to meet in the last week of the month," Lemieux said.
Between now and the end of the month, Lemieux pledged to work with other government departments to draw up options to present to the town council, Lemieux said.
He said the statutory provisions the town council used to make its unusual request Sept. 23 don't fit its circumstances.
"They're not in a bad financial situation. They doing OK but coming forward the community is facing construction of a new storm sewers and a new sewage lagoon... and they're feeling they're going to be under some stress," the minister said.
The province has the authority to appoint an administrator to handle day-to-day business when a local government is overwhelmed by a disaster or a financial emergency and asks for help. But none of those circumstances fits Pine Falls, Lemieux said.
The NDP government said it has already invested millions of dollars in the community since it lost its major employer with the shutdown of the Tembec paper mill more than three years ago.
The loss of the paper mill left a gaping hole in the town's tax base and while the community has investments of more than $600,000 and can still pay its bills, the mayor and council are worried. They don't have the capital to replace an aging sewage system or the resources to estimate how much it will cost, the minister said.
The province has a service to help municipalities draw up estimates for the cost of water and sewage projects.