News Release Archive
MUNICIPAL AFFAIRS--CAPE BRETON REGIONAL MUNICIPALITY
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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
issues."
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
government.
"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
insolvency."
"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
generation.
"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.
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Contact: Michelle Whelan 902-424-6336
trp Nov. 28, 1995
