In a heavy skillet, saute the onions and thyme in butter on low heat for 5 to 7 minutes, until translucent, stirring regularly.
In a small bowl, whisk together the evaporated skimmed milk, flour, nutmeg, salt, and pepper.
Lightly oil a 2-quart baking dish.
Combine the potatoes, carrots, and sauteed onions in the dish and pour the milk mixture evenly on top. Cover tightly with foil and bake for 40 minutes. Lower the heat to 350 degrees F, uncover, and bake for about 30 minutes longer, or until the vegetables are tender and the top is golden hued. Serve piping hot.