CBRM mayor says financial plan is new, but problems and solutions aren’t

Cape Breton Regional Municipality has sent a plan to the province that it says addresses red flags raised by the municipal affairs minister earlier this year. 

In January, John Lohr said he was alarmed by CBRM’s level of uncollected taxes, the municipality’s low financial reserves and its debt management.

Mayor Amanda McDougall said the new plan addresses the municipality’s biggest challenges, but the problems and solutions have long been known.

“None of it is new, per se,” she said.

“I think having these check-ins, making sure we’re reflecting and looking and acting on how to better manage and plan for the future financial capacity of our municipality is not something that is new. It’s not something that we need to be told to do.”

The plan goes into more detail, but is essentially drawn from the recommendations of a four-year-old viability study, McDougall said.

Basic finances, says mayor

McDougall said the plan shows the municipality can maintain the status quo, but cannot get ahead.

That’s partly because mandatory costs to the province for things like housing, education and corrections go up annually, while CBRM’s operating grant from the province has been frozen since 2014.

“It’s like basic financial keeping in your household,” the mayor said. “If your costs are going up, it’s going to be harder to save.”

That also hobbles the municipality’s ability to cut costs and raise taxes, McDougall said.

The action plan says CBRM’s uncollected taxes in 2020-21 totalled nearly $18 million.

It says that comes from abandoned properties, properties with no known owner and the province’s tax sale rules.

CBRM often has to fix up abandoned properties and adds the cost to the tax bill, but if the owner can’t or won’t pay, the property goes to tax sale.

The municipality says it is often unable to recover the full cost. 

In addition, CBRM has 625 property accounts with no known owner, making $2.2 million a year in taxes uncollectible and the amount grows by $100,000 a year.

The municipality spent $28,575 to search the titles of 127 of those properties and was only able to send 21 to a tax sale.

McDougall said that’s a difficult problem to solve.

“It cost about $30,000, an incredible amount of staff time to try to find resolve to these properties and it’s not for any lack of effort,” she said.

CBRM also says the Municipal Government Act requires title searches and surveys to be completed before a property can go up for tax sale and that time adds an extra challenge for staff.

The plan says the pandemic also slowed tax collections, but CBRM has added staff in that department and collections are improving.

CBRM hoping for better funding

CBRM is also considering changing the interest rate on arrears so people will be more likely to pay their taxes.

With a high debt load, CBRM has had difficulty adding to reserve accounts, but the plan says it has increased its operating reserve by nearly 48 per cent in the last five years.

The plan says that could improve if the province boosts municipal funding in a new service exchange agreement that is being negotiated now.

McDougall says she expects public consultation on that proposed new agreement could start as soon as the summer and she is hopeful it will improve CBRM’s bottom line.

The action plan also addresses the minister’s concerns about debt, saying that concern is partly due to a misunderstanding by department officials.

Budget still in progress

CBRM uses its line of credit to finance some projects on a short-term basis before transferring them to long-term debt because it saves about $900,000 on debt servicing costs.

In addition, the municipality has brought its debt down from more than $100 million to under $70 million and has a policy that prevents borrowing more in one year than it pays off.

“Considering the lack of funding that we receive and the financial constraints of our budget, that’s remarkable,” McDougall said.

CBRM has approved this year’s $68-million capital budget for things like streets and sewers, but has been unable to find $2.5 million in cuts or new revenues to balance the $170-million operating budget.

McDougall said budget talks will resume soon and the new action plan shows why that process is getting harder every year.