“The Cape Breton Regional Municipality is unique and, unfortunately, unsustainable,” John MacKinnon told a meeting of the legislature’s Law Amendments Committee on Monday.
MacKinnon is CBRM’s deputy chief administrative officer, who travelled to Halifax with four other CBRM municipal officials to seek changes to a re-negotiated services agreement between the province and municipalities.
“Our transit system and waterworks costs are sinking us,” continued MacKinnon. “We need help. If the province wants to double the population, it needs to invest in municipalities. It needs to double the municipal capacity grant and index it to inflation each year.”
For nearly 30 years, there has been no change in the amount of the lump sum transferred from the province to municipalities to provide equitable services — HRM has its own separate services agreement because of its size. The transfer is called the “municipal capacity grant” and Cape Breton receives $15 million a year, half the grant’s total.
Following the election of the Houston government in 2021, a committee was struck and worked 18 months on recommendations to improve funding to CBRM and other communities. The committee recommended the capacity grant be doubled and be indexed to the rate of inflation to help municipalities pay for the rising cost of services. The Houston government did not go there.
Instead, the Municipal Reform Act, Bill 340, is offering to pick up what municipalities have been contributing toward jails (about $7 million), for operating losses on public housing units, and for the cost (in the future) to tear down or take over obsolete schools.
CBRM has a budget deficit
Like most of Nova Scotia, Sydney and its neighbouring communities in CBRM have seen a recent increase in population, to more than 100,000. Bus service has expanded by 400% since 2016 and the city just installed a $13 million wastewater system that has added $2.5 million to its debt load. Education costs will rise by $1 million this year.
And it’s not cheap to live in Sydney. The tax rate in CBRM is $2 per $100 — the highest in the province — which works out, with other charges, to an annual tax bill of $5,475 on a house worth $250,000, according to CBRM’s chief financial officer Jennifer Campbell. For the first time in recent memory, the Cape Breton Regional Municipality has a deficit budget this year.
CBRM Mayor Amanda McDougall was adamant that Bill 340, as it is written, will result in tax increases for citizens in her area.
“Hypothetically, we are at a point now that an option to end all transfer agreements between CBRM and the province would make more sense than this proposed MOU,” McDougall told the committee.
“We would actually be better off financially if the province stopped sending us our municipal capacity grant and we stopped collecting taxes and remitting them for provincial services. [That amount is $16.5 million] It’s an absurd thing to think about …but this bill needs amendments or it will burden and harm every resident in CBRM.”
CBRM Councillor Steve Gillespie said increasing the capacity grant to municipalities would cost the province less than one-quarter of 1% of its annual budget. Gillespie also asked the bill be amended to double the municipal capacity grant and to freeze what municipalities pay toward education. (Another recommendation from the 2021 review committee that didn’t make the cut).
Winner and losers
The re-negotiated agreement on municipal services does provide the majority of the province’s 49 municipalities with more operating money. Mayors from a dozen communities, including Wolfville, Antigonish, and Yarmouth, appeared before the committee on Monday to speak in support of Bill 340.
Carolyn Bolivar-Getson, the mayor of the municipality of Lunenburg and a former PC Cabinet minister, praised the legislation as “a significant step forward” while adding “there is more work to be done” to tackle outstanding issues around cost-sharing for roads and police services.
However, 17 of the 49 municipalities will receive less under the new services agreement. Five years from now, CBRM will see its $15 million grant drop to $13.4 million.
McDougall urged the committee to support her proposed amendment to Bill 340. During the first year of the services agreement, McDougall’s proposal would require the Department of Municipal Affairs and Housing to negotiate a separate services agreement with CBRM.
That idea arose after negotiations broke down between the province and CBRM last month. Until then, the province had refused to contemplate a separate arrangement for CBRM, claiming the new deal represented by Bill 340 would take care of Cape Breton concerns.
Kendra Coombes, the NDP MLA for Cape Breton Centre-Whitney Pier, introduced an amendment to Bill 340 to address some of the most pressing concerns expressed by CBRM. The amendment would require the doubling of the amount of the municipal capacity grant to be distributed to all municipalities, and, for the total to be adjusted annually in step with the Consumer Price Index (CPI).
Within one year of being implemented, the same amendment would require the minister of Housing and Municipal Affairs “to consult and negotiate with CBRM on a separate funding arrangement that accounts for the unique challenges and needs of the Cape Breton Regional Municipality.”
Although the Liberal members on the Law Amendments Committee supported the NDP changes, the PC majority on the committee defeated the amendment by a margin of 5-4.
The bill will return to the legislature for final reading and approval.