News Release Archive

  Municipal Affairs Minister Sandy Jolly commented today on
  the Cape Breton Regional Municipality's four year plan to
  address its financial situation.
  The minister said she was pleased that Mayor Coady and the
  Cape Breton Regional Council have developed a workable plan.
  "It demonstrates a will on their part to move forward and
  commence work on a number of tough service rationalization
  Cape Breton Regional Municipality came into existence Aug.
  1, merging eight former municipal governments into one.
  Since that time there has been considerable discussion
  centered on the financial situation facing the new regional
  "The new regional government had a debt load to start with,"
  said Ms. Jolly. "It was well known that many of the former
  eight municipalities were experiencing financial
  difficulties from revenue losses and assessment base
  erosion. The reality is that unless there was a streamlined
  municipal government structure put in place most of the
  former eight municipal governments would be facing
  "It will cost roughly $4.2 million less to operate one
  regional government than eight. It means that a one-time
  $4.6 million startup cost will result in annual savings of
  more than $4 million," said Jolly. "This must be considered
  a sound investment."
  The issue which needed to be addressed by the regional
  government and Municipal Affairs relates to the $15.1
  million debt burden being assumed by the amalgamated
  regional government Aug. 1.
  This $15.1 million is made up as follows:
  Deficits of municipalities and agencies,       $3.0
  (March 31, 1995)
  Shortfall in taxes receivable reserve           3.0
  Implementation & Transitional Costs
                          Implementation   $1.5
                          Transitional      3.1   4.6
                          (Severance &
                          building renovations)
  Four month (April 1-July 31/95) imbalances      4.5  $15.1
  The minister said that the four-year plan adopted by the
  Cape Breton Municipal Government and agreed to by Municipal
  Affairs commits the regional government to a program of
  expenditure (service) rationalization and revenue
  "This is the type of plan that logically should follow in a
  restructured amalgamated municipality. It means the way
  services have been delivered will be fundamentally
  challenged and opportunities sought to deliver those
  services more effectively at reduced cost," Ms. Jolly said.
  The agreement contains provision whereby the regional
  government will be allowed to eliminate the $3.0 million in
  accumulated deficits over a period of years.
  The regional municipality will not be required to increase
  their taxes receivable reserve by the $3.0 million
  deficiency. This is an accounting issue which the regional
  municipality agrees can be addressed by implementing a more
  aggressive tax collection policy to reduce outstanding
  taxes, she said.
  The $1.5 million implementation costs associated with the
  set-up of the regional municipality will be amortized over a
  five-year period as provided for under the Cape Breton
  Regional Municipality Act.
  Transitional costs of $3.1 million associated with employee
  severances, necessary renovations to buildings and
  acquisition of computer technology is to be amortized over a
  10-year period.
  The $4.5 million imbalance in revenues and expenditures for
  the first four months of the current fiscal year will be
  incorporated into the full 12 month budget for this current
  year (1995/96).
  The municipality, as part of its plan, has budgeted for a
  tax revenue increase in 1995/96 to raise an amount equal to
  $2,757,000. "Whether this tax increase is raised across the
  board or by some other method is a decision to be made by
  the regional council," said Ms. Jolly.
  These measures, taken collectively, leaves the regional
  municipality with a $2.0 million shortfall in 1995/96, said
  the minister. The province will provide the regional
  municipality with a $2.0 million loan for the 1995/96 fiscal
  year, with no interest for the four year term of the plan.
  If there is compliance by the regional municipality with the
  terms of its plan, the loan will be forgiven at the end of
  the agreement.
  "Let's be clear," said Jolly. "There is no easy answer being
  offered to the Cape Breton Regional Municipality. The
  regional municipality, to their credit, have provided and
  agreed to a plan which will involve tough decisions having
  to be made," said the minister.
  Contact: Michelle Whelan  902-424-6336
  trp                       Nov. 28, 1995