CBRM, province continue to spar over proposed new funding agreement

The Nova Scotia government continues to insist a new funding arrangement with municipalities will benefit all of them, including Cape Breton Regional Municipality.

The province introduced legislative changes last week that would enact what is known as a service exchange agreement, but CBRM officials opposed it and remain adamant that it's a bad deal for their taxpayers that gets worse over time.

On Monday, Municipal Affairs Minister John Lohr told Information Morning Cape Breton that he cannot understand why CBRM objects.

"It's a terrific deal for CBRM," he said. "It benefits every one of the 48 municipalities ... including CBRM and CBRM vastly more than the rest."

If legislative amendments on the funding agreement are approved, municipalities will no longer have to tax residents for corrections and housing.

In CBRM, that would amount to $4.5 million next year and Lohr said the municipality could continue to raise those taxes and use them for municipal services, or it could cut its tax rate.

"Every one of our 48 municipalities will have to decide how they deal with this," he said.

"Some will reduce taxes. Some will provide more services. It's up to them."

Under the proposed deal, more municipalities will qualify for a financial capacity grant from the province, which is unconditional operating money for municipalities whose costs of delivering a core set of services exceed their ability to pay compared to similar municipalities.

Lohr said a committee of municipal officials recommended a new distribution formula and the government listened.

Since 2014, the province has frozen the total amount of funding for the grants at $30 million.

CBRM has always received $15 million of that, but under the proposed deal, its funding would drop to $13.6 million.

Lohr said, however, the provincial government has agreed that any municipality expecting a drop in the grant will get a top-up to their usual amount in the first five years of the deal.

On Monday, CBRM Mayor Amanda McDougall told Information Morning Cape Breton that the province should have increased the overall pot of money so that others would benefit, but not at the expense of CBRM.

"For some municipalities, [the proposed deal] is great," she said.

"Organizations that have not received any capacity grant are now seeing some money and that's what this was supposed to be. This was supposed to be a new deal, a modernized formula recognizing the challenges of today for municipalities. Unfortunately, we're loser No. 1 in this."

CBRM and other municipalities had also opposed a provision in the deal that would have made them responsible for maintenance of provincial roads.

McDougall said that part has been removed, but is likely to come back under further talks at a later date.

However, under the new deal, municipalities will still have to collect taxes for education, which is a provincial responsibility, and send them to the province.

According to CBRM staff calculations, that means the municipality will pay more to the province every year, because education costs rise with inflation, while the provincial grant does not.

According to the staff figures, once the provincial grant drops in five years, CBRM will be sending $8 million more to the province than it gets back.

'We're still running short,' says mayor

McDougall said in the first year alone, CBRM will be in the hole.

"Education for us is about $17 million a year, so even with that $15 million we're going to be getting with our capacity grant, we're still running short," she said.

For years, CBRM has been asking for a municipal charter like the one Halifax has from the province.

That would take it out of the Municipal Government Act and allow CBRM to negotiate a separate deal from other municipalities.

CBRM looking for charter

CBRM says that's important, because its population is 10 times larger than the next largest municipality.

However, officials say the PC government told them to hold off on a charter, because the new funding arrangement would answer most of their concerns.

The province says it offered a charter to CBRM this year, but CBRM refused to put it to a vote of council.

CBRM officials say that offer was only after the municipality objected to the proposed new deal and it would have started a new round of negotiations with no clear terms and no clear timeline.

Proposed deal stalled in legislature

Lohr said if CBRM does not indicate a desire for a charter with a vote of council, it will be subject to the terms of the proposed new arrangement with the other municipalities.

The proposed agreement has to go to the legislature's law amendments committee before it can be enacted.

It had initially been set to go on Monday, but it was delayed during debate at Province House on Friday and it's not yet known when it will go back before MLAs for a final vote.

MORE TOP STORIES