Current State of Municipal Governments in Nova Scotia

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Executive Summary

The Fiscal Review is a joint project between the Province and its municipal partners to examine the state of municipalities, the municipal-provincial relationship and determine how best to allocate resources and responsibilities. This report outlines the current state of municipalities and major issues facing them. It is intended to define the most pressing issues facing municipalities today and in the coming years. In doing so, it will provide a framework for evaluating the current relationship between the province and municipalities.

The Fiscal Review analyzed an extensive amount of information to identify key trends in the municipal sector. Based on this analysis, the following summary of the key trends and issues facing municipalities is presented.

Demographic Decline While the total provincial population is relatively stable, this masks major regional differences. The central region is experiencing significant growth, but there is a steep decline in more remote regions, especially in the smaller towns and rural municipalities. The rate of decline could be a threat to municipal viability: some municipalities are facing the loss of a quarter of their population over the past 20 years.

Slow Economic Growth Economic projections suggest lean times outside of Halifax, with annual growth in GDP hovering around 1%. Challenging economic circumstances are affecting property assessment growth outside of the central region. There are pockets of low growth, and even loss in assessment value, in more remote municipalities, which will create financial pressure because of the importance of the property tax as a source of municipal revenue.

Escalating Cost of Services The average rate of growth is roughly 5% per year, which is faster than population and economic growth in most regions. Municipalities must find ways to contain the growing cost of municipal services, but this will not be an easy task. Some of the largest cost drivers are out of municipal control: education contributions and regulations, including the billion dollar wastewater regulation. Other costs are nearly as difficult to contain, such as increasing specialization and labour costs driving up cost of services like police, fire protection.

Financial and Professional Capacity While municipalities are generally financially stable, they vary significantly in terms of financial capacity and health. We examined a series of financial indicators for each municipality and found that scores varied by class and size of municipality. On average, rural municipalities scored better than towns and larger units scored better ii

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

than smaller units. The contrast was most stark among towns with fewer than 1,000 people, which on average had lower scores for all but two indicators. Capital indicators suggest that municipalities are making regular investments in infrastructure and are setting aside reserves for future projects. However, these indicators are influenced by high levels of federal funding and do not take into account the condition of existing assets, nor the increased cost of replacing infrastructure and meeting new regulations.

Professional capacity is also a significant concern for municipalities. The combined effect of population loss, an aging workforce, and increasing specialization and standardization is impacting the ability of municipalities to recruit qualified staff. Municipalities are experiencing, or expect to encounter, a shortage of qualified applicants for plant operators, engineers, planners, building officials, as well as finance, HR and IT staff. The recruitment problem is more pressing in more remote and smaller units.

Each of these trends on their own represent a serious issue which must be addressed by municipalities in Nova Scotia. When considered together, some of these trends indicate that a change of course is required in the provincial-municipal relationship. The rate of expenditure growth exceeds both population and economic growth patterns and is therefore unsustainable. There is also a clear imbalance between municipal units based on class, size, and location. Rural municipalities, in general, have a stronger revenue base, fewer expenditures per dwelling unit, and better financial performance than towns. In addition, larger and more central units are relatively insulated from negative trends and show stronger financial performance than smaller units.

These circumstances require attention. Failure to address these trends could result in financial problems and potential crises for the most vulnerable municipalities. The Province and its municipal partners must work together and provide strong leadership through the Fiscal Review to recommend substantial change that will improve the framework of municipal government in Nova Scotia.

iii

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Table of Contents

EXECUTIVE SUMMARY ...... II

TABLE OF CONTENTS ...... IV

INTRODUCTION ...... 1 WHAT IS THE PROVINCIAL-MUNICIPAL FISCAL REVIEW? ...... 1 HISTORY OF PROVINCIAL-MUNICIPAL REVIEWS ...... 2 GUIDING PRINCIPLES FOR THE REVIEW ...... 3 ACKNOWLEDGEMENTS ...... 5

MUNICIPAL STRUCTURE ...... 6

DEMOGRAPHIC & ECONOMIC TRENDS ...... 7 POPULATION ...... 7 GROSS DOMESTIC PRODUCT (GDP) ...... 9 ASSESSMENT TRENDS ...... 10

MUNICIPAL REVENUES & EXPENDITURES ...... 14 MUNICIPAL REVENUES ...... 14 MUNICIPAL EXPENDITURES ...... 16 COST DRIVERS ...... 19

FINANCIAL AND PROFESSIONAL CAPACITY ...... 23 FINANCIAL INDICATORS ...... 23 PROFESSIONAL CAPACITY ...... 25

COMBINING THE TRENDS ...... 27 TAX BURDEN ...... 27 GROWTH RATES ...... 28

CONCLUSIONS ...... 29

APPENDICES

APPENDIX 1: MUNICIPALITIES LISTED BY SIZE & REGION ...... 31 APPENDIX 2: POPULATION BY MUNICIPALITY ...... 32 APPENDIX 3: UNIFORM ASSESSMENT BY MUNICIPALITY ...... 34 APPENDIX 4: MUNICIPAL REVENUE ...... 36 APPENDIX 5: MUNICIPAL EXPENDITURES ...... 42 APPENDIX 6: MUNICIPAL INDICATOR DESCRIPTIONS ...... 45 APPENDIX 7: CAPITAL ASSETS BY MUNICIPALITY ...... 46 APPENDIX 8: ESTIMATED RESIDENTIAL TAX BURDEN BY MUNICIPALITY ...... 48

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Introduction

What is the Provincial-Municipal Fiscal Review? In 2010, staff from Service Nova Scotia and Municipal Relations (SNSMR) reviewed the Province’s municipal equalization grant program. During the review, it became clear that it was difficult to review the equalization program in isolation of the other provincial grants distributed to municipalities. As a result, the Province embarked on the Provincial- Municipal Fiscal Review, with the overall goal of determining how provincial support to municipalities could best be allocated.

A Steering Committee was established consisting of elected representatives from municipalities across Nova Scotia and Deputy Ministers from departments where there was a significant level of interaction with municipalities. To support the Steering Committee, a working group was also established, consisting of staff from municipalities across Nova Scotia, staff from the UNSM, and staff from SNSMR’s Municipal Services Division. The working group is supported by a set of subcommittees, with staff representatives from municipalities and relevant departments.

The Review was tasked with two key projects: first to document the current state of Nova Scotia municipalities, and second to use that information to evaluate all relevant aspects of provincial-municipal relationship including: • appropriate funding sources for municipalities; • municipal-provincial responsibilities; • municipal structure; • the impact of regulation on municipalities; • the municipal grants and contributions structure; and • non-financial supports for municipalities;

The Fiscal Review was not tasked with investigating and making recommendations related to economic development and growth. The Nova Scotia Commission on Building Our New Economy is currently engaged in a review of economic development in the province and will have recommendations on the role of municipalities in wealth generation. In addition, the dissolution of the Regional Development Authorities and the development of the Regional Enterprise Networks (RENs) is currently underway and some time is required for the new economic develop framework to establish itself before additional provincial- municipal review should be undertaken.

This report summarizes the Fiscal Review’s work examining the current state of municipalities. The areas reviewed include: • a brief history of previous provincial-municipal reviews; • demographic and economic trends in municipalities; • revenue and expenditure trends; and • financial and professional issues facing municipalities.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

History of Provincial-Municipal Reviews The financial relationship between the Province and municipalities has been examined several times in the past. It is important to understand the outcomes of previous reviews to place the current review in historical context.

The Royal Commission on Education, Public Services and Provincial-Municipal Relations (The Graham Commission) 1974. The main driver behind establishing the Graham Commission was issues surrounding the education system in Nova Scotia. Once the group began exploring municipal contributions to education, they recognized that there were additional, larger issues in provincial- municipal relations that needed to be addressed. As such, the scope of the Graham Commission was expanded and the end result was extensive recommendations to overhaul the entire structure and financing of local government, education, health and social services in the province.

Because the Graham Commission was exhaustive in scope, there were significant challenges for governments seeking to implement the reforms and, initially, very few changes were made. However, today the Graham Commission remains a benchmark in provincial-municipal relations and its work echoes in all subsequent reviews. It was there that the first concept of an equalization grant was developed, and also the starting point for advocating the principle of distinguishing between services for people and services for properties that would later re-emerge during the Service Exchange in 1995.

Service Exchange, 1995 In the early 1990s, a Task Force on Local Government was established to look at local government reform. Many of the same issues reviewed by the Graham Commission years early were still relevant issues for municipalities. The Task Force concluded that there needed to be clear lines of authority for service provision to ensure each level of government could be held accountable for taxpayers. As such, the Task Force recommended that the Province take full responsibility for financing and administration of social services (services to people), while municipalities would be responsible for local services (services to property), including local roads. In addition, the concept of an equalization grant was discussed.

While the general principle behind Service Exchange was similar to that of the Graham Commission (services to people vs. property), the reallocation of responsibilities between the province and municipalities was driven by the goal of revenue neutrality. As a result, even though Service Exchange did result in a major realignment of responsibilities between the Province and municipalities, some issues remained unresolved.

Roles and Responsibilities, 1999 The Roles and Responsibilities review was initiated to address issues that remained unresolved at the conclusion of the Service Exchange, such as education costs. Without the requirement of a revenue neutral exchange of services, Roles and Responsibilities resulted 2

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia in recommendations that would shift approximately $22 million in costs to the Province. Ultimately, the review resulted in few changes to the funding structure between the province and municipalities.

Conclusion It is clear from looking at these past joint reviews that there are no easy answers to long standing issues such as education funding, responsibility for roads, and equalization for municipalities. However, there are lessons to be extracted from the previous reviews to guide the current undertaking. It is important to establish principles and objectives at the outset to ensure that proposed changes align with the purpose of the review. Communication and cooperation between the Province and municipalities is required to ensure the results of the review reflect the realities of both orders of government. Recommendations must also be jointly developed and practical in nature in order to produce meaningful change in municipal-provincial relations.

Guiding Principles for the Review The Steering Committee has outlined a set of principles to guide its work and ensure that the recommendations flowing from the research are congruent with improving the health of municipalities and enhancing the relationship between the Province and its municipalities. The guiding principles for the review are:

1. Effectiveness: Recommendations from the review should improve the transparency and structure of grants and programs provided by the Province and municipalities to provide optimal benefit for taxpayers.

2. Building Relationships: Recommendations from the review should strengthen communication, consultation, sharing of resources and cooperation amongst local governments and between the Province and municipal governments.

3. Municipal Viability: Recommendations from this review should strengthen municipalities’ ability to provide the basic level of service at an acceptable tax burden.

4. Financial Constraint: Recommendations from the review must be aware of the financial limitations of both the Province and municipalities, individually and collectively.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Steering Committee Membership

Union of Nova Scotia Municipalities (UNSM) Province of Nova Scotia*

• Russell Walker • Kevin Malloy, Councillor, Halifax Deputy Minister, SNSMR Regional Municipality • Elizabeth Cody, • David Corkum Deputy Minister, Finance Mayor, Town of Kentville • Judith Ferguson, • Jimmy MacAlpine Deputy Minister, Justice Deputy Warden, District of Digby • Paul LaFleche, Deputy Minister, Transportation and • Claire Detheridge Infrastructure Renewal Councillor, Cape Breton Regional Municipality • Carole Olsen, Deputy Minister, Education • Keith Hunter Warden, County of Cumberland • Sarah Jane Snook, Deputy Minister, Environment • Laurie Murley, Deputy Mayor, Town of Windsor • Lynn Hartwell, Deputy Minister, Community Services • Louis Coutinho, CAO, Town of Windsor • Simon d’Entremont, Deputy Minister, Economic and Rural Development and Tourism

• Marvin MacDonald, Executive Director, Municipal Services, SNSMR

* Provincial Steering Committee Members prior to October 23, 2013.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Acknowledgements The Steering Committee would like to take the opportunity to thank the many individuals and organizations that contributed to producing the report. Many volunteers from municipal governments contributed time and effort to committee meetings and provided valuable information and expertise including: Alain Muise, Barb Wilson, Betty MacDonald, Bob McNeil, Bruce Fisher, Bruce Forest, Claire Detheridge, David Corkum, Don Beatty, Erin Beaudin, Greg Herrett, Greg Keefe, Janice Wentzell, Jerry Blackwood, Jim Smith, Jimmy MacAlpine, John MacKinnon, Keith Hunter, Laurie Lewis, Laurie Murley, Louis Coutinho, Marie Walsh, Matt Davidson, Rennie Bugley, Russell Walker, Scott Conrod and Wayne MacDonald.

Staff from the departments of Community Services, Economic and Rural Development and Tourism, Education, Finance, Energy, Environment, Justice, and Transportation and Infrastructure Renewal were also instrumental to the informed discussions of the Fiscal Review committees. In addition, the Municipality of Chester, and the Association of Municipal Administrators also assisted in hosting meetings.

We would also like to acknowledge the efforts of Masters of Public Administration students Kristen Stallard and Katie Olthuis, staff at the department of Finance, and staff at the Nova Scotia Geomatics Centre for their assistance with research and analysis.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Municipal Structure There are 54 municipal governments in Nova Scotia: 30 towns, 21 rural municipalities, and 3 regional municipalities. In addition, there are 22 villages which provide additional governance and service within built-up areas of some rural municipalities. These local governments are responsible for providing a wide range of services to citizens that include policing, fire protection, transportation, water and wastewater services, land-use planning, and recreation programs. In most cases, the level of service is left to the discretion of municipalities, although some services are highly regulated, such as the provision of drinking water.

In order to provide these services, municipalities have the ability under the Municipal Government Act and the Halifax Regional Municipality Charter to raise revenue, mainly through property taxation. There are many factors that may impact a municipality’s expenditure pressures and revenue generation capabilities. A key requirement of municipal governments is that they are not permitted to budget for an operating deficit. The combination of economic, regulatory and voter preference factors shape councils’ decisions on tax and service levels.

Municipal structure, role, and responsibilities are not static over time. Halifax was the first elected, local government in the province, established in 1841. In 1879, 24 counties were established; however their chief responsibilities related to the courts rather than the local services we understand as municipal today. In 1888, a formal process was established to create towns as separate local governments from the counties that surrounded them. In 1912, municipalities were granted land-use planning authority. In 1996, regional municipalities replaced the former cities of Halifax and Sydney, as well as the towns and counties that surrounded them.

The most recent structural change came in July of 2012, when the Town of Canso was dissolved and is now part of the District of Guysborough. The significant financial pressures, resulting in part from the loss of major employment and the accompanying population decline, played into the decision to change the municipal structure in Guysborough County. The community of Canso is not the only place in the province where significant pressures are being exerted. Before developing recommendations on changes to municipal-provincial relations, it is important to understand what those pressures are and how they are influencing local governments. The following sections outline some of the key challenges facing our municipalities.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Demographic & Economic Trends

Population Population change can have a significant impact on municipalities. Increasing population may increase revenue, and increases demand for existing and new services. Declining population can reduce growth or shrink revenues; however service levels and tax burden expectations remain the same. From 2006 to 2011 the total population in Nova Scotia municipalities grew by less than 1%, and now totals 912,100.1 The growth is distributed unevenly across the province. Since the last census, 37 of 55 municipal units experienced population decline, with southerly or northerly municipalities more likely to experience loss than central ones (see Figure 1; for a list of municipalities included in region, class and size groupings, refer to Appendix 1: Municipalities Listed by Size & Region; for population data by municipality refer to Appendix 2: Population by Municipality).

Figure 1. Population Change by Economic Region, 2006-2011 6% 5%

4% 2% 2%

-2% -2% -4% -3%

-6% -6% -8%

Source: SNSMR analysis of 2011 Census Data

The regional trends in population change are not simply a short term shift; rather they are the continuation of the trend towards rural depopulation and growth in more central areas that has been occurring over several decades (see Table 1).

1 Figure does not include population on native reserves in Nova Scotia. 7

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Table 1. 5- and 20-year Population Change by Economic Region,

5-year 20-year Region change change Cape Breton -5.2% -17.7% North Shore -0.6% -4.6% Halifax 4.7% 17.9% Annapolis Valley 0.8% 4.7% Southern -2.6% -8.8% Source: SNSMR analysis of 1991-2011 Census Data

Changes in population also vary by type and size of municipalities. The rate of population loss among small towns and smaller rural municipalities is much greater than in the larger towns and rural municipalities (See Figure 2). This pattern suggests that the trend of urbanization is occurring not just in HRM, but is also between other municipalities, where regional population centres appear to be somewhat insulated from the steep population losses, which are of concern in the least populous parts of the province.

Figure 2. Population Change by Class and Size, 1991-2011

20.0%

15.0%

10.0%

5.0%

0.0% Small Large Small Large CBRM HRM -5.0% Towns Towns Rurals Rurals -10.0%

-15.0%

-20.0%

-25.0%

Source: SNSMR analysis of 1991-2011 Census Data

There are other demographic trends which could have bearing on the future viability of Nova Scotia municipalities. The portion of youth in the population has declined, while the number of seniors in the population has increased. Median household income in Nova

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Scotia in 2006 was $46,605, 13% lower than the national average. Furthermore, the disparity Population Decline in Small between HRM and the rest of the municipalities Nova Scotia Towns inflates the provincial average: only 5 other municipalities have household income at or above Small towns like Shelburne have seen the provincial average. major population loss. From 1991 to 2011 the population in the town has Nova Scotia communities also fare poorly on other declined by approximately 25% from socio-economic measures: only 3 units meet the 2,245 to 1,686 people. national average (62%) for employment participation and only 12 municipalities meet the national average (55%) for portion of the population with a high school education.

Demographic trends show that the population of Nova Scotia is aging and leaving the rural areas. Outside of the central region, income, employment and education rates lag behind national averages.

These patterns have major ramifications for the Source: SNSMR analysis of 1991-2011 Census data viability of our municipalities, and must be carefully considered during the Fiscal Review.

Gross Domestic Product (GDP) General economic trends have a significant impact on municipal governments. While municipalities do not tax incomes directly, corporations and individuals are unable to pay property taxes without economic activity to generate wealth in the community. Economic performance has been poor across Canada in recent years, though it appears that some recovery has begun to take place nationally. Despite these optimistic signs, economic performance in Nova Scotia is not expected to match national growth.

While economic data for each municipality is not available, it is instructive to look at economic performance by region to understand the trends and challenges impacting municipalities. Growth is expected to be strongest in the Halifax region, where major projects such as the Irving shipbuilding contract and residential and institutional development projects are expected to drive economic growth above the national average (Canmac Economics, 2012). Unfortunately, the outlook is not as positive for other regions of the province where traditional industry disruption, demographic trends, and fewer major projects constrain growth (see Figure 3).

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Figure 3. Estimated Annual Growth in GDP By Economic Region, 2011-2016 5.0% 4.3% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.7% 1.4% 1.5% 1.1% 0.9% 1.0% 1.0% 0.5% 0.0%

Source: Canmac Economics 2012

Assessment Trends A municipality’s ability to raise revenue through the property tax is dependent on the economic performance of their community, especially the income of its residents and businesses. Because its tax is collected based on property assessments, trends happening with property assessments within a municipality are an important component of its ability to raise revenues.

The current legislation sets out market-based property assessment as the means to allocate the cost of municipal services, meaning those with higher-valued properties pay a larger share of municipal taxes. Municipalities determine the amount of funds required to provide the services wanted by their citizens, and use the assessment value of properties in the municipalities to determine the tax rate. Legislation allows for a residential rate and a commercial rate. Typically, commercial property is taxed at a higher rate than residential. Communities with a greater percentage of commercial properties may be able to shelter residential taxpayers from expenditure pressures compared to municipalities with fewer commercial properties.

Assessment Growth Increases in the tax base can occur in several ways. First the value of the assessment base can rise simply due to pressures in the real estate market. These increases might occur regardless of whether individual owners or the community as a whole have seen increases in their income or ability to pay taxes. Secondly, there can be construction of new homes and buildings, and renovations in existing buildings. This new growth is generally associated with an increase in population or economic growth.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Figure 4. Average Annual Assessment Growth, From New Construction and Existing Taxable Assessment, 2009/10-2013/14

by Economic Region by Municipal Class & Size

Source: SNSMR analysis of PVSC data

Contrasting Assessment Growth Figure 4 shows average growth in assessment, breaking Patterns down the growth into increases due to new 2 The Municipality of East Hants, construction (both renovations and new properties), benefiting from close proximity to HRM and increases in the value of existing taxable experiences some of the fastest new assessment. As seen with population and GDP trends, construction and assessment growth in the centrally located municipalities, led by Halifax, the province. shows the largest growth in assessment, whereas the northern and southern regions show slower growth (for data on uniform assessment growth by municipality refer to Appendix 3: Uniform Assessment by Municipality).

The largest variation comes from growth in the value of existing tax base. The more active real estate market in

the Halifax region creates additional tax base for the source: SNSMR analysis of PVSC data municipality than in other regions. The smaller towns and rural municipalities have the lowest growth in both On the other hand, the District of Guysborough experienced only modest new construction and existing assessment. This trend growth from construction, and taxable mirrors the demographic changes, where the steepest assessment did not grow at all due to decline is in the smallest towns and rural municipalities. falling market values.

2 Some caution is necessary when interpreting new construction data. This information is derived from estimated value of projects as stated on building permits. As a result, total taxable value may vary once an assessment is performed by PVSC on the completed property. 11

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Challenges of the Property Tax Unlike other forms of taxes, the property tax rate is reset annually. Property taxes are more visible to taxpayers than other forms of tax, and property taxpayers tend to be more vocal about the tax. The general public perception is that rising assessments mean higher taxes. In some cases it does, if: • the costs of providing services has increased; • if new or better services are planned; • if the property in question is rising in value more than most.

However, service costs are the major driver of tax rates; assessment is the means by which the costs are allocated to individual properties. This link to services is often interpreted by the public as the services they individually receive, yet the cost drivers of municipal services aren’t necessarily tied to a property. So the property tax system is not without its difficulties.

Of particular concern is that increases in market assessment varies by location and time within any given year, the relative market assessment in a neighbourhood can change. Some areas rise faster than others or decrease from year to year. Changes in relative market assessments affect the relative share of the costs of providing local services, thus shifting taxes from lower growth properties to higher growth properties. Municipalities are not able to vary the tax rate according to neighbourhood assessment trends - there is one general tax rate for all residential properties. As relative assessments change, tax bills vary. An individual property owner may see their property assessment increase without having done any improvements to their property and, as a result, their taxes will rise if the tax rate remains the same. When municipalities set the tax rate, they need to consider the impact on those with higher market assessments and those with faster growing assessments, as their taxes will increase more.

As well, rising assessments do not necessarily mean the community can afford more taxes. Assessments are based on conditions two years ago, while economic conditions are current, so there are times when the economy has taken a downturn, yet assessments continue to increase. Furthermore, assessment changes do not move in lock step with local economic conditions, so there can be increases in assessment through real estate pressure despite low economic activity.

Municipalities have tools such as property tax exemptions and deferrals to assist low income property owners challenged to pay their property taxes. The Province, through the Department of Community Services, also offers a property tax program to assist low- income seniors. In addition to these programs targeted at low income homeowners, the Province introduced a Capped Assessment Program (CAP) to address rising assessments. The CAP, which has been in place since 2005, limits the amount that an eligible individual’s

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia residential taxable assessment can grow annually to the (spell out on 1st reference)CPI. The CAP does not apply to: • new properties; • properties that have been sold in the assessment year; • properties whose market assessment increase was less than the CPI; • apartments with four or more units; • properties owned by non-residents; or • commercial properties.

While the CAP does increase the stability of tax bills for eligible property owners, it increases the inequalities in the property tax system: similar homes on the same street paying different taxes based only on how recently they were sold. As the difference between the market values and capped values increase, the inequities increase. The impact of the CAP is increasing annually, and now applies to over three quarters of all residential accounts and exempts approximately 10% of total residential assessment from taxation (see Figure 5). In the future, CAP may also create a disincentive to purchase or renovate a home, as the gap between capped and uncapped properties grows and potential buyers become aware of the program’s implications.

Figure 5. Total Market and Taxable Assessment, All of Nova Scotia, 2004/05-2012/13

$80,000,000,000 $75,000,000,000 $70,000,000,000 $65,000,000,000 $60,000,000,000 Market Value $55,000,000,000 $50,000,000,000 Capped $45,000,000,000 Value $40,000,000,000 $35,000,000,000 $30,000,000,000 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 Source: SNSMR Analysis of PVSC Data

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Municipal Revenues & Expenditures

Municipal Revenues

The main source of revenue for municipalities is property taxes, which generate more than three quarters of all municipal revenues (Figure 6). The next largest source of revenue is sale of goods and services followed by other own source revenue3.

Figure 6. Municipal Revenue Sources as a Percentage of Total Revenue by Year

90% Taxes

80% Grants-in-Lieu of Taxes 70% Service to other 60% Govs Sales of Services 50%

40% Other Own Sources

30% Unconditional Transfers 20% Conditional 10% Transfers (Fed/ Prov) Conditional 0% Transfers (Local)

Source: SNSMR analysis of municipal financial information

Property tax revenue growth averaged 5.1% a year from 2004/05 to 2009/10. Sales of services has been the fastest growing source of revenue for that period, increasing by an average of 9.6% annually, and now accounts for a tenth of municipal revenues. While this is still a relatively minor source, its growth appears to indicate a trend towards developing non-traditional sources of revenue.

3 Other own source revenue includes revenue generated from licenses and permits, fines, rentals, concessions and franchises, return on investments, penalties and interest on overdue taxes, and revenue collected on behalf of other governments/agencies. For full classification of municipal revenues see Appendix 4: Municipal Revenue. 14

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Six municipalities acquired greater than 10% of their revenue from sale of services in 2009/10.4 There did not appear to be any regional, size or class trends in the use of sale of services or reliance on the property tax. Revenue information by class is available in Appendix 4: Municipal Revenue.

Figure 7. Municipal Revenue By Class, 2009/10 (in $Millions)

189.6 289.0 Towns Regionals Rurals 849.5

Source: SNSMR analysis of municipal financial information

Regional municipalities hold the greatest share of municipal revenue (64%; $849 million), compared to rurals (21%; $289 million) or towns (14%; 189 million; see Figure 7). The relative strength of the tax base is best illustrated by considering the effect of a one cent change in tax rate (see Table 2). A one cent tax rate change in rural municipalities equals $1.9 million, compared with only $0.6 million in towns. This pattern in the distribution of revenue mirrors those seen in demographic and economic data, showing greater revenue strength in larger and more centrally-located municipalities.

Table 2. Effect of a 1¢ Change in Tax Rates By Class, 2009/10 Residential Commercial Total

Towns $460,184 $145,773 $605,957 Rurals $1,744,245 $232,263 $1,976,508 CBRM $307,398 $58,359 $365,757 HRM $2,781,489 $605,596 $3,387,085 Queens $67,904 $10,889 $78,793 Source: SNSMR analysis of PVSC Data

4 District of Barrington (18.3%), District of Guysborough (38.6%), Town of Parrsboro (10.3%), Town of Port Hawkesbury (15.8%), HRM (11.5%) and the Region of Queens Municipality (10.5%).

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Over the years, grant programs to municipalities have been developed by the Province to address some of the financial pressures that municipalities have faced. The largest of these is the Equalization Grant, which allocates over $32 million annually to municipalities. Seventeen other programs distribute approximately $43 million annually and target a wide range of areas, such as fire protection, community transportation, governance studies, and e-government (a full list is provided in Appendix 4: Municipal Revenue). One of the chief outcomes of the Fiscal Review is to examine the rationale and methodology used to distribute these grants to determine if there are more effective ways of distributing these funds.

In addition to these grants, there are a series of federal/provincial infrastructure funding programs: Building Canada Fund, Infrastructure Stimulus Funding, Municipal Rural Infrastructure Program and the Federal Gas Tax Program. While all of these programs are scheduled to conclude by 2014, there are new commitments from the federal government for infrastructure funding and negotiations are underway to outline those.

Municipal Expenditures Expenditures vary from one municipality to Figure 8. Total Municipal Expenditures the next. The type of municipality, the service by Class, 2009/10 (in $Millions) demands of citizens and service users, provincial and federal regulations, the location and geography of the municipality, demographics and council priorities all play a role in determining the type and level of service delivered. Municipal expenditures5 in 2009-10 totalled $1.2 billion, and have been growing by an average of 5.25% annually since 2004-05. While regionals, led by HRM, make up the bulk of total expenditures (see Figure 8), expenditure growth has been fastest in rural municipalities, averaging Source: SNSMR analysis of municipal financial information 5.6% per year, compared with 5.3% in regionals, and 4.6% in towns.

Expenditures per dwelling unit provide a means of comparing the cost of delivering services between municipalities. Figure 9 shows the various costs of services per dwelling unit for different sizes and classes of municipality. Outside of HRM, towns have higher total expenditures per dwelling unit, with small towns ($3,236/DU) slightly higher than their larger counterparts ($3,140/DU). It is important to bear in mind that service levels can

5 Expenditures in this section refer to operating expenditures, including interest on long-term debt made by municipalities. This does not include amortization expenses or principal payments on outstanding debt. For further information on the definitions of municipal expenditure classification, refer to Appendix 5: Municipal Expenditures).

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia vary significantly between municipalities and therefore a low cost per dwelling unit is not necessarily an indication of efficiency.

Figure 9. Total Expenditures per Dwelling Unit by Size and Class, 2009/10 $4,000 3,612 $3,500 3,236 3,140

$3,000

2,474 $2,500

$2,000 1,758 1,587 $1,500

$1,000

$500

$0 Small Towns Large Towns Small Rurals Large Rurals CBRM HRM (+Queens)

Source: SNSMR analysis of municipal financial information

Municipal expenditures can also be broken down by types of service to allow for comparisons. Figure 10 provides a breakdown of municipal expenditures by type from 2005 to 2010.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Figure 10. Municipal Expenditure Areas6 all municipalities, 2004/05 - 2009/10

$350,000,000

$300,000,000 General Government Services Protective Services $250,000,000

Transportation Services $200,000,000 Environmental Health Services $150,000,000 Public Health and Welfare Services Environmental $100,000,000 Development Services Recreation and Cultural Services $50,000,000 Education

Source: SNSMR analysis of municipal financial information

The largest areas of expenditures for municipalities were protective services at $327 million, which includes policing, fire protection and emergency services. Protective services are also the highest expenditure for each class of municipality. Transportation is the next largest expenditure for towns and regionals, while education is the second largest expenditure for rurals and the third largest for regionals (see Table 3 and Appendix 5: Municipal Expenditures for further detail). There were no significant regional patterns in expenditure by type or expenditures per dwelling unit, except HRM has higher total expenditures and expenditures per dwelling unit than all other municipalities.

6 Specific municipal services are classified into larger categories to facilitate reporting and comparison. General government includes council, finance, and general administration; protective services includes police and fire; transportation includes roads and transit; environmental health includes solid waste and wastewater; public health includes contributions to social housing; environmental development includes land-use planning and economic development; recreation and culture includes recreation programming and libraries. For greater detail, refer to Appendix 5: Municipal Expenditures. 18

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Table 3. Top Three Expenditure Areas by Class 2004/05-2009/10 Towns Regionals Rurals (% of Towns Total Exp.) (% of Regional Total Exp.) (% of Rurals Total Exp.)

Protective Services (30%) Protective Services (27%) Protective Services (26%)

Transportation (17%) Transportation (19%) Education (21%)

General Government (15%) Education (18%) Environmental Health (19%) Source: SNSMR analysis of municipal financial information

Cost Drivers Given the growth in expenditures seen over the five-year period examined, it is worthwhile to examine the various factors which drive municipal expenditure. Simple inflation is not sufficient to explain the cost increases. From 2005 to 2010, annual growth in the consumer price index averaged about 2.5% compared to municipal expenditure Waste Water Treatment in CBRM growth of just over 5% per year. The Major upgrades are required to the sewage following factors were identified by treatment systems in CBRM to meet the new the Fiscal Review as influencing standards. The municipality estimates that it expenditure growth in municipalities. will require $425 million in capital investments by 2021, an additional $29 million by 2040. Regulation The most significant example of regulatory cost increases is the adoption of Canadian Council of the Ministers of the Environment (CCME) Wastewater Effluent Treatment Standards. The total bill for municipal wastewater infrastructure upgrades is expected to exceed $1 billion by 2040 when the standards will be fully implemented. It is more difficult to quantify increased operating costs incurred by municipalities to meet new regulations. Some examples The municipality estimates that the cost of include higher education, enforcement operating the new facilities will cost an and diversion costs required to meet additional $10 million annually. solid waste diversion targets legislated in the Environment Act Source: CBRM Wastewater Strategy, 2011 Regulations, increased finance staff capacity to meet Public Sector Accounting Board (PSAB) standards

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia and provincial reporting requirements set out in the Financial Reporting and Accounting Manual (FRAM) regulations, and increased costs to complete mandatory water quality testing at water treatment facilities.

Inflation & Contract Pressures Municipal governments, like every sector of the economy, face annual cost increases for basic expenditures like wages and fuel. In addition to general cost increases, municipalities must contend with contracts for major municipal services where they have little ability to contain escalating costs. Forty-three municipalities contract their policing services from the RCMP, either through the Provincial Policing Services Agreement (PPSA) or directly with the national force.7 The Province annually negotiates cost increases with the RCMP; however these negotiations are significantly impacted by contract negotiations between the federal government and the RCMP’s Labour Relations Program. Municipalities are given the opportunity, through an advisory committee to provide the municipal perspective to provincial negotiators, but have little influence on the outcome of the negotiations. Even where a municipality operates its own police force, binding arbitration legislation for police officers limits the municipality’s ability to contain cost increases.

Service Level Demands and Specialization The services our municipalities provide today are far broader than when municipalities were first created in the 19th century. The extent of municipal services in the areas of policing, fire protection, water and wastewater treatment, recreation, and cultural services is also much expanded compared to municipal services a few decades ago. While many services that municipalities currently provide are not mandatory, if they decide to provide a service there are often standards that must be met. As a result, the cost and complexity of these services is greater than in the past. For example, the requirements of a local fire department are significantly different today. Insurance, legal and liability issues, technological improvements in fire suppression equipment and increased knowledge of workplace hazards have combined to significantly increase the cost of fire protection. Municipal councils are faced with pressure to provide a range of services that would improve the quality of life for the community. Councils must balance the desire for new and expanded services with escalating costs of existing services and the added tax burden required to provide any new services. For example, many municipalities are now engaged in economic development to a greater extent than in the past. While not a mandatory municipal service, economic development is a major issue facing most municipalities. Councils have been investing in development agencies and increasingly hiring their own economic development officers to increase their ability to influence economic growth in their communities.

7 Includes HRM, which uses an integrated police force made up of the Halifax Regional Police and RCMP. 20

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Mandatory Contributions Municipalities are required to collect revenue on behalf of the provincial government. The lion’s share of revenue is used for education, but there are also mandatory municipal contributions to corrections and housing. Mandatory municipal contributions totaled over $223 million8 in 2012/13, and annually represent approximately one-fifth of all municipal expenditures. Though municipalities must collect the revenue, they have no control over the level of contribution to these services, and therefore have no ability to limit the growth in these expenditures. In addition, the magnitude of these mandatory contributions limits

Impact of Rising Costs

The information to the top right shows Tax Revenue Increase (Decrease) the new revenue that the District of Residential $255,622 Chester would gain in 2013/14 Commercial $1,315 compared to the previous year if they held their tax rates at the same level as Resource $12,208 the previous year. This would provide Business Occupancy ($15,445) $243,481 in new revenue. Forest Lands (-50,000 acres) ($687) Forest Lands (+50,000 acres) ($9,532) Below is the increase in costs which Total $243,481 council cannot avoid, either because they are mandatory costs set by the Province (e.g. education) or because Mandatory Payments Increase (Decrease) they are a pre-calculated costs for Education $202,000 mandatory services that council cannot Corrections ($2,803) change (e.g. RCMP contract or property RCMP $38,681 assessment services). Mandatory payments will increase by $236,623. Prosecution Services $6,700 Provincial Roads $1,220 This leaves less than $7,000 to cover any Regional Housing Authority $0 in-house cost increases, and to consider Assessment Services (PVSC) ($9,175) any new, expanded services. With a total Regional Library Payment $0 budget of $22.4 million, the net increase $236,623 in disposable revenue from assessment

growth is less than 0.1% of the budget, illustrating the difficulties municipalities face when trying to limit cost increases. Tax Revenue Increase after Mandatory Expenditures $6,858

Source: District of Chester pre-budget analysis

8 Not including HRM’s annual supplementary contributions to the Halifax Regional School board and the Conseil Scholaire Acadien Provincial. 21

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia the financial capacity municipalities have to manage the growing cost of providing municipal services.

Density The density of a community can have paradoxical effects on the cost of municipal services. Higher density can reduce the cost per unit for some services, like solid waste, roads and streets, or wastewater collection systems. On the other hand, the cost of some services such as policing can increase with higher density because a greater level of police protection is required in more urban environments. In addition, the demand for many municipal services increases in denser neighborhoods. For example, higher density means smaller lot sizes, which cannot accommodate onsite septic systems, while greater density means streets need extra lanes, traffic signals and sidewalks.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Financial and Professional Capacity

Financial Indicators Local governments in Canada are generally quite financially stable. Due to conservative financial management and provincial controls on operating deficits and capital borrowing, municipalities exhibit good financial performance and are relatively insulated from cyclical economic changes. As a result, the likelihood of municipal bankruptcy is low in Nova Scotia; however, our stable framework for municipal finance is not entirely without risk. No municipality can remain protected from major economic shocks, such as the collapse of primary industries in the region, and municipalities must remain responsive to the socio- economic factors that shape their communities. In addition, as we have already seen in this report, there can be a good deal of variation between municipalities in terms of economic growth, tax base, and service needs. Finally, merely avoiding bankruptcy is not a sufficient benchmark for financial performance. Communities need financially strong municipalities so that they can provide excellent municipal services and community leadership.

A series of indicators were examined to provide a general picture of municipal financial condition. While indicators cannot provide a comprehensive assessment of financial condition, they can provide some indication of trends and areas where municipalities may be struggling. Thirteen indicators were selected for comparison across all municipalities using data from the 2009-2010 fiscal year (for further information refer to Appendix 6: Municipal Indicator Descriptions). Municipalities were grouped by class, size, and region to identify trends influencing indicator scores.

From the indicators it is clear that there is a range of performance on financial indicators, which suggests that fiscal capacity is different across municipalities. Overall, rural municipalities scored better than towns on the financial indicators. On average, rural municipalities had a higher rate of growth in their tax base, higher levels of reserves, lower reliance on transfers, and lower debt scores. Towns did fare better when comparing commercial assessment ratios, although rural municipalities have greater total value of commercial assessment and growth in commercial assessment varies by the size of the municipality, not by the class.

There were no significant differences between average scores for towns and rural municipalities on the following indicators: uncollected taxes, reliance on a single account, deficits, budget accuracy, liquidity, depreciation of capital assets, and capital investment. The differences between municipalities became more apparent when classes were broken down by population size. Small towns or small rural municipalities scored lower on nine of the thirteen indicators (see Table 4).

This trend was magnified when examining only the smallest municipalities. Average scores for towns with populations of less than 1,000 were lower on all indicators except commercial assessment ratios and deficits. These very small towns had more than double

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia the reliance on transfers and twice the rate of uncollected taxes than other municipalities, while experiencing less than half the average growth in uniform assessment.

Table 4. Municipal Indicator Scores by Class and Size, 2009/10

Small Towns Large Towns Small Rurals Large Rurals Municipal Class & Size (pop<2,500, (pop>2,500, (pop<10,000, (pop>10,000, 16 MUs) 15 MUs) 9 MUs) 13 incl. RQM)

Reliance on 15% 9% 6% 5% Transfers Uncollected 11% 10% 12% 7% Taxes 3 Year Growth in Tax 8% 15% 17% 20% Base Commercial 26% 23% 21% 11% Assessment Reliance on a Single 11% 6% 8% 3% Account Deficits in 1.8 1.6 1.3 1.5 last 5 Years Budget 5% 1% 2% 1% Accuracy Liquidity 149% 109% 496% 121%

Debt 7% 9% 4% 6% Service Debt 1.2% 1.4% 0.3% 0.5% Outstanding Reserves 22% 33% 48% 41%

Depreciation of Capital 61% 64% 67% 69% Assets Capital 285% 314% 143% 345% Investments Source: SNSMR analysis of municipal financial information

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

A note regarding municipal infrastructure is warranted here. Municipal organizations, such as the Federation of Canadian Municipalities (FCM) and the UNSM, have highlighted the critical need for greater investment in municipal capital assets. The federal and provincial governments have responded to this issue with increased funding, including the Federal Gas Tax Program, and cost-shared programs such as the Build Canada Fund and the Infrastructure Stimulus Fund. Until recently, there was little standardized information reported by Nova Scotia municipalities on the age of capital assets. As a result of accounting changes, we now have data estimating the age and remaining useful life of capital assets. Using this information, we examined three capital indicators in addition to the usual debt level indicators. Capital indicators suggest that municipalities are making regular investments in their infrastructure, and are setting aside reserves for future projects. As seen in Table 5, Towns hold a greater share of total Table 5. Total Capital Assets by Class, 2009-10 capital assets than rural municipalities, despite Net Book Value Gross Cost holding a smaller share of Town s 617,043,270 (11%) 946,926,663 (16%) the tax base. For more Regionals 2,101,483,856 (6%) 3,097,064,431 (9%) information on each Rurals 436,408,735 (2%) 646,543,523 (4%) municipality’s capital asset data please refer to All Units 3,154,935,861 (5%) 4,690,534,617 (8%) Appendix 7: Capital Assets (Value in bracket shows capital assets as a percentage of uniform assessment) by municipality. Source: SNSMR analysis of municipal financial information

While the indicators suggest relatively positive financial circumstances, there are still gaps in information which limit the conclusions that can be drawn from our capital indicators. Most importantly, the capital indicators do not take into account the level of capital investment that is required of municipalities to meet new water, wastewater and solid waste standards. While accounting estimates of the age and deprecation of assets are useful, they do not provide sufficient information to assess the condition of assets, and therefore cannot be used to estimate the cost to replace assets because they are based on historical, not current dollars. Finally, because it is relatively new data, we are unable to examine the longer term trend to determine whether municipal capital spending and reserve contributions are driven by cost-shared programs, and therefore are likely to decline without continued federal and provincial support, or whether the investment levels were and would remain sufficient in other conditions.

Professional Capacity Municipalities are very concerned about their ability to attract and retain qualified staff. A number of factors are contributing to this issue. The population loss experienced in many communities, combined with an aging workforce, means that there are fewer potential job seekers. In addition, the increased regulation and specialization of municipal services

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia increases the minimum level of training and education needed for many municipal positions. Particularly Election Candidates Wanted problematic are positions which require specialized training, including building In the summer of 2012, municipalities were officials; planners; water and busily preparing for the upcoming general wastewater treatment plant operators; municipal elections. In the Town of engineers; as well as human resources, Mulgrave it became clear that there was a information technology, and finance problem by nomination day. There were staff. In the past decade new water and only 3 candidates for the 5 seats on town wastewater treatment standards have council. The three candidates were increased the level of qualification acclaimed, and the town would need to required of operators, new accounting hold two special elections in order to fill standards have increase the training the remaining seats. Due to the recent requirement for finance staff, and the departure of a councillor who moved out of recent provincial review of fire services the area, the town is now preparing for its has recommended increased training 3rd by-election in less than a year. and requirements, which will increase operating costs and could pose recruitment challenges.

Meeting the professional capacity requirements will be more challenging in more remote and smaller municipalities because there is a smaller pool of applicants, and these units generally have difficulty offering salaries and benefits that are competitive with similar positions in larger labour markets. Municipalities report only minimal succession planning for their workforce. More comprehensive succession planning should include recruiting appropriate developmental staff, internal promotion practices, continuous learning approach to training, strategies to address organizational gaps and strategies to mitigate against loss of institutional memory and functionality when long-tenured employees leave the organization.9

In addition to staffing issues, smaller municipalities have experienced issues with generating enough interest in council positions to maintain a healthy, democratically- elected local government. Smaller towns such as Mulgrave and Middleton have experienced low numbers of residents willing to run in municipal elections, to the extent that there is a diminished opportunity to engage in the democratic debate generated by elections.

9 For more information on recruitment and staffing issues please refer to the Next Generation Report Prepared for the Association of Municipal Administrators of Nova Scotia: http://www.amans.ca/index.php?/projects-and- resources/member-only-resources.html 26

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Combining the Trends

Tax Burden As noted above, municipalities rely heavily on the property tax for revenue. Comparing property taxes between municipalities can be tricky because of differences in assessment values, tax rates, municipal expenditure decisions, and household incomes.

Because of the interaction between assessment and property tax rates, it is important to look beyond tax rates to gain an understanding of tax burden. By dividing total revenue generated from residential taxation10 by the number of dwelling units, it is possible to create an estimated average tax bill for each municipality. While there are limitations to this calculation, it does provide a reasonable basis for comparison.

Figure 11. Estimated Average Residential Property Tax Burden

by Class and Size, 2010-11

Source: SNSMR

The average estimated tax burden in towns is approximately $428 higher than in rural municipalities (see Figure 11). While CBRM and Queens had an average tax burden similar to a rural municipality, HRM had the highest average tax burden at $1,865 per dwelling unit. There was little difference between average tax bills in small and large towns, but the average burden was approximately $270 higher in the large rurals compared to smaller rurals. There were no regional patterns found in estimated tax burden.

It is also valuable to consider the relative effort required for a family to pay the property tax. This can be done by expressing the average tax burden as a portion of income for each

10 Due to the method of data collection, actual residential area rate information is not available for all municipalities. To account for this data issue an estimate of revenues from residential area rates is included in the calculation based on the percentage of residential assessment in each municipality with area rates. 27

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia municipality.11 A similar pattern emerges when incorporating average incomes: property taxes consume more of a household’s income in towns (3.7%) than in rural municipalities (2.1%). It is important to remember that these indicators do not provide the full picture on municipal service level, efficiency or affordability. Further information on estimated average residential tax burden by municipality can be found in Appendix 8: Estimated Residential Tax Burden by Municipality.

Growth Rates As noted above, municipal expenditures have been growing steadily at just above 5% per year. The provincial government experienced roughly the same expenditure growth throughout the same time period. In the context of the current economic climate, characterized by low growth in gross domestic product (GDP) and virtually no population growth for the province, the current rate of expenditure growth is not sustainable for either the provincial or municipal governments (See Figure 12).

Figure 12. Average Expenditure Growth vs. Population and GDP Projections, 2011-2016

Source: SNSMR

Because municipalities are prohibited from running operating deficits, if these trends continue unchanged, we can expect to see rising property burdens; however, it appears unlikely that there will be sufficient growth in household income to sustain this rate of growth. The combination of continued municipal expenditure growth with modest or no growth in the general economy suggest that municipalities will likely need to seek options for reducing expenditure growth.

11 Calculated by dividing the estimated average residential tax burden for all dwelling units in a municipality by the median household income for each municipality reported in the 2006 National Household Survey. The simple mean of this indicator was then calculated for each class of municipality. 28

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Conclusions

From the trends noted above, it is clear that there are some pressing challenges facing municipalities. Declining population size combined with an aging population are a major concern in many municipalities. In the short term, this translates into an increased tax burden: there are fewer people to fund services at the same time as incomes growth slows or reverses as more of the population retires. In the long term, these demographic trends call into question the viability of these local governments. While some communities, including centrally-located municipalities, are not experiencing the same demographic pressures, this pattern of a greying and shrinking population pose serious concerns for the province as a whole.

Economic trends will likely add to the demographic pressures. Economic growth in the province will largely occur in the Halifax region in the short and medium term. To date, growth in assessment has been stable; however, the combination of population loss and low or no economic growth could combine to erase and even reserve growth in the municipal tax base outside of the central region.

The recent trends in municipal revenues and expenditures show a growth rate that outstrips expected economic and population growth. This pattern is not sustainable. While municipalities will face some tough budgeting decisions, major cost drivers such as mandatory education contributions and regulated services such as policing are largely beyond their control.

There are indications that some municipalities are not in a position to withstand the significant pressures expected in the coming years. Smaller towns and rural municipalities do not perform as well on key financial indicators as the centrally-located or larger units on key financial indicators. There is also an imbalance between municipal structures. Towns face a disadvantage compared to other municipal units with respect to access to revenue, tax burden, service expectations and transportation responsibilities.

These circumstances require attention. Failure to address these trends and issues could result in financial problems and potential crises for the most vulnerable communities. Cooperation and leadership are required so that the province and its municipal partners can address these challenges for the benefit of all Nova Scotians.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Appendices

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Appendix 1: Municipalities Listed by Size & Region

Economic Regions (Statistics Canada classification) Cape Cape Breton Regional Municipality, Inverness, Port Hawkesbury, Breton Richmond, Victoria Amherst, Antigonish (Co.), Antigonish (Town), Colchester, Canso, North Cumberland, Guysborough, Mulgrave, New Glasgow, Oxford, Shore Parrsboro, Pictou (Co.), Pictou (Town), Springhill, St. Mary’s, Stellarton, Stewiacke, Trenton, Truro, Westville. Halifax HRM Annapolis (Co.), Annapolis Royal, Berwick, Bridgetown, East Hants, Valley Hantsport, Kentville, Kings, Middleton, West Hants, Windsor, Wolfville. Argyle, Barrington, Bridgewater, Chester, Clare, Clark’s Harbour, Digby (Co.), Digby (Town), Lockeport, Lunenburg (Co.), Southern Lunenburg (Town), Mahone Bay, Queens, Shelburne (Town), Shelburne(Co.), Yarmouth (Co.), Yarmouth (Town)

Size & Class (2011 Census Population) Large Rurals+ Small Towns Large Towns Small Rurals Queens (under 2,500) (over 2,500) (under 10,000) (over 10,000) Town of Annapolis Royal Town of Amherst Argyle Annapolis Town of Berwick Town of Antigonish Barrington Antigonish Town of Bridgetown Town of Bridgewater Clare Chester Town of Canso Town of Kentville Digby Colchester Town of Clark's Harbour Town of New Glasgow Guysborough Cumberland Town of Digby Town of Pictou Richmond Hants East Town of Hantsport Town of Port Hawkesbury Shelburne Hants West Town of Lockeport Town of Springhill St. Mary's Inverness Town of Lunenburg Town of Stellarton Victoria Kings Town of Mahone Bay Town of Trenton Lunenburg Town of Middleton Town of Truro Pictou Town of Mulgrave Town of Westville Yarmouth Town of Oxford Town of Windsor Town of Parrsboro Town of Wolfville Queens Town of Shelburne Town of Yarmouth Town of Stewiacke

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Appendix 2: Population by Municipality 5-Year Population12 (Towns) 2011 2006 Change Town of Amherst 9,717 9,505 2% Town of Annapolis Royal 481 444 8% Town of Antigonish 4,524 4,236 7% Town of Berwick 2,454 2,454 0% Town of Bridgetown 949 972 -2% Town of Bridgewater 8,241 7,944 4% Town of Canso13 806 911 -12% Town of Clark's Harbour 820 860 -5% Town of Digby 2,152 2,092 3% Town of Hantsport 1,159 1,191 -3% Town of Kentville 6,094 5,815 5% Town of Lockeport 588 646 -9% Town of Lunenburg 2,313 2,317 0% Town of Mahone Bay 943 904 4% Town of Middleton 1,749 1,829 -4% Town of Mulgrave 794 879 -10% Town of New Glasgow 9,562 9,455 1% Town of Oxford 1,151 1,178 -2% Town of Parrsboro 1,305 1,401 -7% Town of Pictou 3,437 3,813 -10% Town of Port Hawkesbury 3,366 3,517 -4% Town of Shelburne 1,686 1,879 -10% Town of Springhill 3,868 3,941 -2% Town of Stellarton 4,485 4,717 -5% Town of Stewiacke 1,438 1,421 1% Town of Trenton 2,616 2,741 -5% Town of Truro 12,059 11,765 2% Town of Westville 3,798 3,805 0% Town of Windsor 3,785 3,709 2% Town of Wolfville 4,269 3,772 13% Town of Yarmouth 6,761 7,162 -6% Towns Total 107,370 107,275 0.1%

12 Population data retrieved from Statistics Canada Census information for municipal boundaries. Figures do not include native population on reserves. 13Town of Canso is no longer an incorporated town (the community has been included in the Municipality of the District of Guysborough). 32

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

5-Year Regionals14 2011 2006 Change Cape Breton Regional Municipality 97,398 102,250 -5% Halifax Regional Municipality 390,096 372,679 5% Region of Queens 10,917 11,177 -2% Regionals Total 498,411 486,106 2.5%

5-Year Rurals15 2011 2006 Change Municipality of Annapolis 17,577 18,141 -3% Municipality of Antigonish 14,692 14,239 3% Municipality of Argyle 8,252 8,656 -5% Municipality of Barrington 6,994 7,331 -5% Municipality of Chester 10,599 10,741 -1% Municipality of Clare 8,319 8,813 -6% Municipality of Colchester 36,624 36,134 1% Municipality of Cumberland 15,312 16,021 -4% Municipality of Digby 7,463 7,986 -7% Municipality of Guysborough 4,189 4,681 -11% Municipality of Hants East 22,111 21,397 3% Municipality of Hants West 14,165 13,871 2% Municipality of Inverness 13,781 14,896 -7% Municipality of Kings 47,569 47,814 -1% Municipality of Lunenburg 25,118 25,164 0% Municipality of Pictou 21,278 21,553 -1% Municipality of Richmond 8,812 9,296 -5% Municipality of Shelburne 4,408 4,828 -9% Municipality of St. Mary's 2,354 2,587 -9% Municipality of Victoria 6,597 7,186 -8% Municipality of Yarmouth 10,105 10,304 -2% Rurals Total 306,319 311,639 -1.7%

14 Population data retrieved from Statistics Canada Census information for municipal boundaries. Figures do not include native population on reserves. 15 Population data retrieved from Statistics Canada Census information for municipal boundaries. Figures do not include native population on reserves 33

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Appendix 3: Uniform Assessment by Municipality Average Towns 2009-10 2004-05 Annual Growth Town of Amherst 431,925,426 336,873,642 5.0% Town of Annapolis Royal 70,396,637 47,571,271 7.8% Town of Antigonish 389,086,669 285,905,600 6.2% Town of Berwick 115,582,563 104,095,650 2.1% Town of Bridgetown 41,546,363 34,885,123 3.5% Town of Bridgewater 514,533,271 437,755,395 3.2% Town of Canso16 19,229,330 22,485,339 -3.1% Town of Clark's Harbour 35,939,912 32,377,251 2.1% Town of Digby 105,250,635 78,155,766 6.0% Town of Hantsport 102,658,454 67,877,208 8.3% Town of Kentville 387,878,420 308,382,087 4.6% Town of Lockeport 26,041,614 23,875,683 1.7% Town of Lunenburg 202,264,076 144,450,698 6.7% Town of Mahone Bay 96,951,812 69,816,332 6.6% Town of Middleton 87,006,697 79,817,952 1.7% Town of Mulgrave 40,771,634 30,769,164 5.6% Town of New Glasgow 454,106,646 385,599,553 3.3% Town of Oxford 63,454,013 65,182,905 -0.5% Town of Parrsboro 48,324,594 41,124,646 3.2% Town of Pictou 137,115,796 104,420,133 5.4% Town of Port Hawkesbury 174,650,647 157,397,023 2.1% Town of Shelburne 77,766,292 70,785,566 1.9% Town of Springhill 127,043,960 110,819,882 2.7% Town of Stellarton 196,763,918 166,886,837 3.3% Town of Stewiacke 59,020,047 43,923,136 5.9% Town of Trenton 97,049,902 83,851,136 2.9% Town of Truro 695,751,173 587,827,702 3.4% Town of Westville 106,632,691 77,503,849 6.4% Town of Windsor 182,829,730 148,565,058 4.2% Town of Wolfville 367,419,752 238,438,224 8.6% Town of Yarmouth 409,906,859 327,228,659 4.5% Towns Total 5,864,899,534 4,714,648,470 4.4%

16Town of Canso is no longer an incorporated town (the community has been included in the Municipality of the District of Guysborough). 34

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Average Regionals 2009-10 2004-05 Annual Growth Cape Breton Regional Municipality 3,467,099,767 2,939,288,597 3.3% Halifax Regional Municipality 30,182,485,006 20,663,008,048 7.6% Region of Queens 808,797,127 630,040,263 5.0% Regionals Totals 34,458,381,899 24,232,336,908 7.0%

Average Rurals 2009-10 2004-05 Annual Growth Municipality of Annapolis 866,185,940 671,935,198 5.1% Municipality of Antigonish 760,312,748 534,532,822 7.0% Municipality of Argyle 417,121,000 331,981,411 4.6% Municipality of Barrington 361,015,727 295,656,456 4.0% Municipality of Chester 1,151,822,606 704,839,217 9.8% Municipality of Clare 468,139,638 363,833,047 5.0% Municipality of Colchester 1,806,541,093 1,421,858,611 4.8% Municipality of Cumberland 966,763,310 753,244,465 5.0% Municipality of Digby 346,886,780 259,844,739 5.8% Municipality of Guysborough 436,626,194 282,986,326 8.7% Municipality of Hants East 1,102,064,171 769,142,802 7.2% Municipality of Hants West 690,908,963 512,734,603 6.0% Municipality of Inverness 739,711,487 568,774,359 5.3% Municipality of Kings 2,735,525,302 2,182,216,170 4.5% Municipality of Lunenburg 1,943,533,597 1,278,114,788 8.4% Municipality of Pictou 1,134,391,008 994,965,263 2.6% Municipality of Richmond 791,169,501 739,151,645 1.4% Municipality of Shelburne 293,460,504 215,935,569 6.1% Municipality of St. Mary's 163,295,206 146,270,217 2.2% Municipality of Victoria 506,873,060 381,482,395 5.7% Municipality of Yarmouth 544,742,585 404,093,388 6.0% Rurals Totals 18,227,090,418 13,813,593,491 5.5%

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Appendix 4: Municipal Revenue

Revenue Area Classifications

Taxes Other Revenue from Own Sources • Assessable Property • Licenses and Permits • Special Assessments • Fines • Business Property • Rentals • Deed Transfer Tax • Concessions and Franchises • Other Taxes • Return on Investments • Penalties and Interest on Taxes Grants in Lieu of Taxes • Miscellaneous • Federal Government • Unconditional Transfers from • Federal Government Agencies Other Governments • Provincial Government o Federal • Provincial Government Agencies o Provincial o Other Local Service Provided to Other Governments Conditional Transfers • Federal Government • Federal Government • Provincial Government • Federal Agencies • Other Local Government • Provincial Government • Provincial Agencies Sales of Services • General Government Services Conditional Transfers from Other • Protective Services Local Governments • Transportation Services • Conditional Transfers from Other • Environmental Health Services Local Governments • Public Health and Welfare Services • Environmental Development Other Transfers / Collections for Other Services Governments • Recreation and Cultural Services • Transfers from Own Valuations, • Other Services Allowances and Equity • Transfers from Other Funds • Transfers from Own Agencies • Collections for Other Governments • Other

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Total Revenue Data by Class, 2004/05-2009/10 Rurals YEAR Taxes Grants-in- Service Sales of Other Unconditional Conditional Conditional Total Lieu of Provided to Services Revenue Transfers Transfers Transfers Taxes Other Gov. from Own from Other from Fed./ from Other Sources Gov. Prov. Local Gov. 2004-05 174,996,686 5,811,838 8,232,966 3,090,659 9,398,292 8,101,514 2,301,303 1,579,079 213,512,337 2005-06 188,091,604 5,900,476 6,250,728 5,130,791 13,573,977 8,886,783 1,780,661 1,469,263 231,084,283 2006-07 201,042,862 6,424,485 3,694,562 16,015,690 14,023,923 6,781,234 1,233,781 2,572,143 251,788,680 2007-08 211,230,503 6,845,820 2,841,352 13,788,598 17,032,229 7,603,983 3,135,448 1,655,768 264,133,700 2008-09 222,079,278 6,411,531 2,799,762 13,637,183 17,894,208 8,048,617 3,085,602 1,575,357 275,531,538 2009-10 236,792,427 6,656,048 3,010,164 13,609,537 17,406,813 6,941,151 2,739,146 1,874,254 289,029,540 TOTAL 1,234,233,360 38,050,198 26,829,534 65,272,458 89,329,442 46,363,282 14,275,941 10,725,864 1,525,080,078 % 80.9% 2.5% 1.8% 4.3% 5.9% 3.0% 0.9% 0.7% 100.0%

Towns YEAR Taxes Grants-in- Service Sales of Other Unconditional Conditional Conditional Total Lieu of Provided to Services Revenue Transfers Transfers Transfers Taxes Other Gov. from Own from Other from Fed./ from Other Sources Gov. Prov. Local Gov. 2004-05 114,747,150 5,103,009 2,646,191 6,267,959 7,234,765 8,738,978 907,775 142,305 145,788,132 2005-06 121,634,165 5,267,118 1,503,199 7,831,072 9,384,866 8,660,577 1,740,732 304,882 156,326,611 2006-07 126,971,647 6,041,010 1,799,580 9,442,720 9,146,906 10,445,601 1,223,382 474,374 165,545,220 2007-08 132,451,740 6,356,817 1,894,150 10,017,247 10,079,997 10,777,601 2,439,220 473,533 174,490,305 2008-09 138,755,354 6,395,730 2,313,115 10,380,157 10,036,186 11,301,028 2,827,175 530,634 182,539,380 2009-10 143,960,582 6,947,689 2,667,901 10,036,510 9,590,114 11,738,777 4,073,832 576,314 189,591,719 TOTAL 778,520,638 36,111,373 12,824,136 53,975,665 55,472,834 61,662,562 13,212,116 2,502,042 1,014,281,367 % 76.8% 3.6% 1.3% 5.3% 5.5% 6.1% 1.3% 0.2% 100.0%

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Regionals YEAR Taxes Grants-in- Service Sales of Other Unconditional Conditional Conditional Total Lieu of Provided Services Revenue Transfers Transfers Transfers Taxes to Other from Own from Other from Fed./ from Other Gov. Sources Governments Prov. Local Gov. 2004-05 522,067,374 27,314,644 624,767 63,014,730 26,208,700 16,323,419 3,716,352 0 659,269,986 2005-06 547,810,979 27,806,305 656,872 66,862,104 28,889,372 16,288,055 4,135,846 0 692,449,533 2006-07 568,809,113 33,165,327 1,837,747 73,502,775 37,827,315 18,587,472 3,937,636 0 737,667,385 2007-08 608,071,011 35,303,460 1,499,671 86,774,777 41,690,771 21,912,590 4,829,624 0 800,081,904 2008-09 628,206,517 33,429,507 1,709,623 93,068,738 47,316,751 21,302,465 4,753,527 0 829,787,128 2009-10 666,289,932 33,756,141 1,744,198 93,453,815 24,045,840 20,949,311 9,241,623 0 849,480,860 TOTAL 3,541,254,926 190,775,384 8,072,878 476,676,939 205,978,749 115,363,312 30,614,608 0 4,568,736,796 % 77.5% 4.2% 0.2% 10.4% 4.5% 2.5% 0.7% 0.0% 100.0%

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Provincial Grant Programs Grant Budget Objective Equalization $32.05 million Legislated, unconditional grant to assist municipalities whose costs of delivering a core set of services exceed their ability to pay when compared to similar municipalities (Note: equalization also includes a $50,000/year foundation grant to all towns). Provincial Grant In $15.6 million Legislated grant to municipalities on eligible, tax-exempt Lieu of Property Tax properties to help offset the cost of providing municipal (PILT) services (i.e. police, roads); equal to the amount that would be paid if the property were not tax-exempt. NSPI Grant In Lieu $11.6 million To ensure municipal units with NSPI assets are receiving (funded by payment for services provided. NSPI provincial payment) HST Offset- MUs $6 million A portion of the payment from NSPI that is distributed to (funded by municipalities to partially offset the cost of the HST to NSPI provincial municipalities. payment) Provincial Capital $3.75 million To assist municipal units with the cost of high priority Assistance Program infrastructure projects, reducing the cost burden to a (PCAP) reasonable level. Farm Property Grant $1.7 million To preserve and encourage agriculture activities within the province by providing active farmers with reduced property taxes on farm property. Fire Protection Grant $1.2 million To contribute towards providing fire protection services to provincial properties not otherwise subject to payment of a grant-in-lieu of property taxes. Community/ $870,000 Provides financial assistance to municipalities and non- Accessible profit community-based organizations involved in the Transportation delivery of inclusive (accessible) transportation services in Program rural areas of the province. (CTAP/ATAP) Emergency Services $500,000 To assist first responder organizations with the purchase Provider Fund of equipment used directly in response to a fire or emergency situation.

Community $250,000 This grant is used to assist non-profit community Accessibility organizations and municipalities with the removal of barriers in public buildings and other venues to persons with disabilities.

Nova Scotia Transit $300,000 NS-TRIP provides funding to support capacity building Research Incentive initiatives intended to generate new and improved public Program (NS-TRIP ) transit services in rural and un-serviced urban areas of Nova Scotia.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Grant Budget Objective Municipal Capacity $532,800 Funds are typically used to fund various municipal Building Fund conferences / capacity building.

Funding for the Office of Municipal Auditor General (300k) and the UNSM Sustainability Coordinator are also included in this amount. Local Government $150,000 To fund a wide variety of studies, from financial condition Studies of a certain municipality, HR/operational issues, restructuring etc.

Legion Capital $100,000 The LCAP is intended to assist Royal Canadian Legions in Assistance Program Nova Scotia to upgrade their facilities. (LCAP) E-government $75,000 To promote and facilitate use of IT solutions for various Initiative municipal needs. HST Offset- Villages $70,000 Partial offset of the cost of HST for villages. (funded by the Province) Municipal Internship $50,000 To assist Nova Scotia’s municipalities in attracting, training and developing competent municipal administrators; an avenue for encouraging recent grads to consider a career in municipal government; provide an opportunity for individuals to gain experience in municipal government. Community Grants Varies Funds are paid out based on direct requests to the department. Effective April 1, 2012 this program was transferred to Community, Culture and Heritage.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Federal-Provincial Infrastructure Funding Programs Program Duration Provincial $ Federal $ Benefits Building Canada Fund Water and Communities 2007-14 $37 million $37 million Wastewater Component (BCF-CC) Upgrades

Program Building Canada Fund Extended to Water Communities allow project $14 million $14 million Wastewater Component TopUp completion by Local Roads (BCF-CC Top Up) October 31/11

Building Canada Fund The Province does Water Major Infrastructure 2007-14 $25.05 million not administer the Wastewater Component (BCF- Federal share. Local Roads MIC)

Building Canada Fund Provincial/Territorial Wastewater 2007-14 $2.2 million $2.2 million Base Funding (BCF- Local Roads P/T Base)

Program Wastewater Extended to Infrastructure allow project $19.45 million $19.45 million Water Stimulus Fund (ISF) completion by Local Roads October 31/11

2005-2014 Municipal Rural Water (Program Infrastructure $44.5 million $44.5 million Wastewater Extension Program (MRIF) Solid Waste Approved)

$145.2 million Water & (2005-10) Wastewater Federal Gas Tax 2005-14 Solid Waste and $223 million Public Transit (2011-14) upgrades

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Appendix 5: Municipal Expenditures

Expenditure Area Classifications General Government Services Environmental Development Services • Legislative • Environmental Planning and • General Administrative Zoning • Other General Government • Community Development Services • Housing • Natural Resource Development Protective Services • Industrial Parks and Commissions • Police Protection • Other Environmental Development • Law Enforcement Services • Fire Protection • Emergency Measures Recreation and Cultural Services • Other Protection • Recreational Facilities • Cultural Buildings and Facilities Transportation Services • Other Recreational and Cultural • Common Services Services • Road Transport • Air Transport Fiscal Services17 • Water transport • Debt Charges • Public Transit • Transfers to Own Reserves, Funds • Other Transportation and Agencies • Unconditional Transfers to Other Environmental Health Services Government Agencies (now • Sewage Collection and Disposal reported as “Education”) • Garbage and Waste Collection and • Conditional Transfers to Other Disposal Government Agencies • Other Environmental Health • Transmission of Taxes Collected for Other Governments Public Health and Welfare Services • Other Fiscal Services • Public Health • Hospital Care • Other Health

17 In 2008 the reporting of these items changed so that fiscal expenses related to expenditure areas were included in those areas.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Total Expenditures Data by Class, 2004/05-2009/10

Rural Municipalities Environ- Environ- Public Recreation General Transport- mental Protective mental Health and and YEAR Government ation Develop- Education Totals Services Health Welfare Cultural Services Services ment Services Services Services Services 2004-05 36,824,948 50,195,157 10,104,768 33,645,354 263,601 7,783,563 9,917,295 49,360,566 198,095,253 2005-06 37,149,587 53,321,354 10,753,991 38,196,607 4,604,564 6,793,495 9,842,061 50,129,836 210,791,495 2006-07 37,710,795 58,062,032 11,412,200 44,529,716 1,760,801 7,909,127 10,972,595 53,689,576 226,046,842 2007-08 40,178,437 61,603,274 12,802,157 47,078,024 1,870,709 8,721,259 11,165,033 57,147,863 240,566,757 2008-09 43,087,976 66,939,714 12,391,428 48,622,023 1,804,125 9,918,288 12,437,674 58,302,407 253,503,635 2009-10 45,960,026 67,849,233 11,939,037 50,334,212 2,578,828 10,747,368 13,195,149 59,247,207 261,851,060 TOTAL 240,911,769 357,970,765 69,403,580 262,405,937 12,882,628 51,873,101 67,529,807 327,887,445 1,390,855,042 % 18% 26% 5% 19% 1% 4% 5% 21% 100%

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Towns Environ- Environ- Public Recreation General Transport- mental Protective mental Health and and YEAR Government ation Develop- Education Totals Services Health Welfare Cultural Services Services ment Services Services Services Services 2004-05 19,819,617 40,505,256 22,159,336 15,166,941 378,431 7,142,366 12,991,473 15,729,483 133,892,902 2005-06 21,718,426 41,950,141 23,264,075 15,710,455 1,930,309 6,475,562 13,840,854 16,427,335 141,317,157 2006-07 21,709,551 43,866,959 24,294,754 16,049,520 2,224,428 6,540,296 14,467,496 16,860,629 146,013,632 2007-08 23,434,759 49,018,287 27,026,598 16,817,380 2,270,227 6,727,719 15,702,058 17,458,405 158,455,434 2008-09 25,843,592 51,209,864 28,407,302 17,608,504 2,892,196 7,129,366 15,945,739 17,532,411 166,568,974 2009-10 26,009,191 51,721,763 27,265,067 18,553,976 3,006,658 7,661,806 16,384,788 17,849,261 168,452,510 TOTAL 138,535,136 278,272,269 152,417,132 99,906,777 12,702,250 41,677,113 89,332,408 101,857,524 914,700,609 % 15% 30% 17% 11% 1% 5% 10% 11% 100%

Regionals Environ- Environ- Public General Transport- mental Recreation Protective mental Health and YEAR Government ation Develop- and Cultural Education Totals Services Health Welfare Services Services ment Services Services Services Services 2004-05 87,180,917 157,639,458 107,467,120 58,540,404 1,073,333 20,154,903 48,661,427 105,901,341 586,618,903 2005-06 88,275,371 164,383,900 108,148,508 62,926,552 5,000,987 16,913,060 47,607,517 111,843,002 605,098,898 2006-07 90,879,989 182,063,582 117,462,240 64,716,351 5,375,126 19,073,105 50,180,627 116,822,878 646,573,898 2007-08 97,154,465 191,951,679 137,483,033 63,233,398 5,403,410 18,866,200 54,586,632 124,307,630 692,986,446 2008-09 111,854,841 199,425,119 148,146,490 56,355,326 5,374,838 17,972,084 57,864,713 126,063,300 723,056,711 2009-10 119,136,539 207,442,135 150,165,896 64,731,269 5,315,202 18,240,474 69,440,759 129,762,868 764,235,142 TOTAL 594,482,122 1,102,905,872 768,873,287 370,503,301 27,542,895 111,219,826 328,341,675 714,701,019 4,018,569,998 % 15% 27% 19% 9% 1% 3% 8% 18% 100%

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Appendix 6: Municipal Indicator Descriptions

Indicator Name Description Reliance on Transfers Total transfers from other governments as a percentage of total revenue. Provides indication of high reliance on support from other governments. Uncollected Taxes Total uncollected taxes as a percentage of total tax levy. Provides indication of ability to collect accounts owed. 3 year Growth in Tax Percentage growth in the tax base as measured by uniform Base assessment. Provides indication of the growth in revenue potential in a municipality. Commercial Assessment Total commercial assessment as a percentage of total taxable assessment. Provides an indication of commercial property in the municipality, which generally has higher tax revenue production. Reliance on a Single Assessed value of largest non-residential account as a Account percentage of uniform assessment. Provides an indication of a municipality’s reliance on a single employer. Deficits in Number of operating deficits recorded in the previous five last 5 Years years. Repeated deficits can indicate financial difficulties. Budget Accuracy Total surpluses and deficits over three fiscal years as a percentage of total expenditures over same three years. Provides indication of municipality’s ability to accurately forecast revenues and expenditures. Liquidity Short term assets divided by short term liabilities. Provides indication of cash flow in a municipality. Debt Service Interest and principal payments on debt as a percentage of own source revenue. Provides indication of level of capital borrowing by a municipality. Debt Outstanding Total unpaid capital debt as a percentage of uniform assessment. Provides indication of level of capital borrowing by a municipality. Reserves Total operating and capital reserves as a percentage of total expenditures. Provides an indication of whether a municipality is prepared for future capital investments and unforeseeable or emergency expenditures. Depreciation of Capital Net book value of capital assets as a percentage of gross Assets costs. Provides an indication of age of infrastructure owned by a municipality. Capital Investments Total capital expenditures for the fiscal year as a percentage of total depreciation on capital assets for the same fiscal year. Provides an indication of the rate at which a municipality is replacing assets as they age.

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Appendix 7: Capital Assets by municipality18 Net Book Gross Cost NBV as GC as Town Value (NBV) (GC) % of UA % of UA Town of Amherst 32,708,769 56,835,121 8% 13% Town of Annapolis Royal 6,324,026 10,273,228 9% 15% Town of Antigonish 21,808,793 35,244,710 6% 9% Town of Berwick 9,898,748 17,908,648 9% 15% Town of Bridgetown 8,573,778 10,811,931 21% 26% Town of Bridgewater 63,095,449 101,687,743 12% 20% Town of Canso19 8,867,112 13,371,894 46% 70% Town of Clark's Harbour 3,390,300 6,080,569 9% 17% Town of Digby 11,372,397 20,417,713 11% 19% Town of Hantsport 7,821,680 9,344,854 8% 9% Town of Kentville 32,333,263 48,184,721 8% 12% Town of Lockeport 2,676,516 6,292,951 10% 24% Town of Lunenburg 28,514,877 41,185,628 14% 20% Town of Mahone Bay 10,533,015 15,137,001 11% 16% Town of Middleton 9,298,530 15,658,386 11% 18% Town of Mulgrave 4,948,054 9,649,256 12% 24% Town of New Glasgow 46,381,200 70,242,600 10% 15% Town of Oxford 6,406,090 10,956,304 10% 17% Town of Parrsboro 6,755,646 10,136,745 14% 21% Town of Pictou 18,856,381 25,534,414 14% 19% Town of Port Hawkesbury 31,627,979 45,832,583 18% 26% Town of Shelburne 10,747,712 17,779,622 14% 23% Town of Springhill 17,338,778 25,440,907 14% 20% Town of Stellarton 26,090,232 41,710,130 13% 21% Town of Stewiacke 6,682,996 9,542,949 11% 16% Town of Trenton 6,813,685 14,943,558 7% 15% Town of Truro 78,310,917 111,222,318 11% 16% Town of Westville 8,643,700 14,423,200 8% 14% Town of Windsor 20,048,407 29,998,606 11% 16% Town of Wolfville 17,621,943 27,994,980 5% 8% Town of Yarmouth 52,552,297 73,083,393 13% 18%

18 Values are for consolidated assets of the municipality as reported in the consolidated financial statements, for the fiscal year 2009-10. 19 Town of Canso is no longer an incorporated town (the community has been included in the Municipality of the District of Guysborough).

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Net Book Gross Cost NBV as GC as Regionals Value (NBV) (GC) % of UA % of UA Cape Breton Regional Municipality 224,263,177 302,609,737 6% 9% Halifax Regional Municipality 1,841,318,000 2,744,169,000 6% 9% Region of Queens Municipality 35,902,679 50,285,694 4% 6%

Net Book Gross Cost NBV as GC as Rurals Value (NBV) (GC) % of UA % of UA Municipality of Annapolis 23,878,773 30,197,395 3% 3% Municipality of Antigonish 9,959,533 16,480,100 1% 2% Municipality of Argyle 5,952,698 8,800,894 1% 2% Municipality of Barrington 12,457,785 18,187,950 3% 5% Municipality of Chester 17,983,509 35,434,022 2% 3% Municipality of Clare 11,487,423 16,284,221 2% 3% Municipality of Colchester 50,161,543 100,765,847 3% 6% Municipality of Cumberland 18,332,174 24,365,049 2% 3% Municipality of Digby 8,654,368 11,529,104 2% 3% Municipality of Guysborough 25,002,292 33,930,598 6% 8% Municipality of Hants East 63,325,979 80,507,577 6% 7% Municipality of Hants West 15,082,719 19,251,517 2% 3% Municipality of Inverness 16,952,516 23,970,511 2% 3% Municipality of Kings 43,817,300 78,016,900 2% 3% Municipality of Lunenburg 27,250,672 35,847,503 1% 2% Municipality of Pictou 41,777,387 49,314,341 4% 4% Municipality of Richmond 14,226,939 20,904,379 2% 3% Municipality of Shelburne 1,312,427 3,421,485 0% 1% Municipality of St. Mary's 2,169,135 3,558,815 1% 2% Municipality of Victoria 8,036,001 9,743,271 2% 2% Municipality of Yarmouth 18,587,562 26,032,044 3% 5%

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Appendix 8: Estimated Residential Tax Burden by Municipality20 Residential Tax As % of Median Town Burden Household Income (2009/10) Town of Amherst 1,123 3.1% Town of Annapolis Royal 1,517 4.2% Town of Antigonish 956 2.5% Town of Berwick 1,551 3.5% Town of Bridgetown 1,283 3.4% Town of Bridgewater 1,628 4.1% Town of Canso21 787 2.6% Town of Clark's Harbour 1,018 2.8% Town of Digby 1,260 4.4% Town of Hantsport 1,491 3.0% Town of Kentville 1,642 3.7% Town of Lockeport 1,238 3.7% Town of Lunenburg 1,832 4.8% Town of Mahone Bay 2,158 5.9% Town of Middleton 1,248 3.1% Town of Mulgrave 1,299 3.2% Town of New Glasgow 1,381 3.5% Town of Oxford 1,149 3.0% Town of Parrsboro 1,103 4.0% Town of Pictou 1,403 3.3% Town of Port Hawkesbury 1,346 2.8% Town of Shelburne 1,224 3.5% Town of Springhill 1,230 3.3% Town of Stellarton 1,309 3.3% Town of Stewiacke 1,485 3.6% Town of Trenton 1,153 2.6% Town of Truro 1,379 3.8% Town of Westville 1,486 3.9% Town of Windsor 1,605 4.7% Town of Wolfville 1,932 5.2% Town of Yarmouth 1,536 4.9%

20 Residential Tax burden is calculated by dividing total residential revenue (residential property tax revenue from the general rate plus the estimated total revenue from residential area rates), by the number of dwelling units in the municipality. Median household income information retrieved from Statistics Canada long form census data, 2006. 21 Town of Canso is no longer an incorporated town (the community has been included in the Municipality of the District of Guysborough).

Provincial-Municipal Fiscal Review Part I: The Current State of Fall 2013 Municipal Governments in Nova Scotia

Residential Tax As % of Median Regionals Burden Household Income (2009/10) Cape Breton Regional Municipality 1,078 2.7% Halifax Regional Municipality 1,812 3.3% Region of Queens Municipality 899 2.2%

Residential Tax As % of Median Rurals Burden Household Income (2010/11) Municipality of Annapolis 841 2.3% Municipality of Antigonish 1,046 2.0% Municipality of Argyle 926 1.9% Municipality of Barrington 1,016 2.3% Municipality of Chester 1,341 3.1% Municipality of Clare 868 2.1% Municipality of Colchester 1,002 2.2% Municipality of Cumberland 848 2.1% Municipality of Digby 842 2.2% Municipality of Guysborough 377 1.1% Municipality of Hants East 1,454 2.6% Municipality of Hants West 896 1.9% Municipality of Inverness 781 1.7% Municipality of Kings 931 2.0% Municipality of Lunenburg 1,259 2.8% Municipality of Pictou 821 1.8% Municipality of Richmond 717 1.8% Municipality of Shelburne 1,082 2.7% Municipality of St. Mary's 494 1.4% Municipality of Victoria 996 2.3% Municipality of Yarmouth 1,245 2.8%