Index ‘a starting point’ to examine municipal health

John DeMings
Published on May 16, 2014

The site of Digby Academy, demolished last fall, is among properties listed in Digby’s tax sale this month. Uncollected taxes were flagged in the province’s  Financial Condition Index issued May 15.

File photo

A report on the financial health of Nova Scotia municipalities is a good beginning, but will be more useful when more data is added to it, says Digby mayor Ben Cleveland.

“Really, it’s just like any other financial statement. It’s a snapshot of a certain time, the fiscal year 2011-12. It will be more useful when it has two or three years of data. That will show trends.

“But it is a good tool for council and it’s a good tool for the public,” he said.

The Financial Condition Index, which was prepared by the provincial government, showed some red flags for Digby, despite a generally positive review.

One red flag was for uncollected taxes, with Digby’s figure at 14.3 per cent, well above the town average of 9.7 per cent.

“We’re always hesitant to go to tax sale, but we’re going to one May 26,” Cleveland said. “Typically, we don’t go for three years (in arrears). We try to work with property owners.”

The amount of uncollected taxes is also a sign of a depressed economy, he said.

Among properties listed for tax sale is the site of the old, now demolished Digby Academy, but also all the properties in town of California resident Krzyztof Cieply.

Another red flag in the index for lack of change in three-year tax rate. But the mayor said assessed values haven’t changed and the town’s ability to raise dollars is not there.

There’s a yellow flag on residential tax rate which is just below average, but that’s an indication of low average incomes in town, said Cleveland. Average income in Nova Scotia for a family is $45,000, but in Digby is $33,000.

The result is a town with lower incomes, “but costs of providing basic infrastructure remain the same as elsewhere.”

Among the positive aspects of the town showing was a lower reliance on provincial transfers and its healthy operational reserve—almost three times the town average—which means Digby is able to service its debt, said the mayor.

On the other hand, five-year contributions to capital reserves were at zero when the FCI snapshot was taken, creating another red flag.

That figure was because the town had just spent heavily on its new sewage treatment  program. The capital reserve could be brought up by transferring from the operational reserve, he said.

The Financial Condition Index also includes a town profile that Cleveland says reflects his growing concern about the aging town population. Digby is below average in the percentage of 20- to 40-year-olds, but well above average in people 65 and over. There has been a slight increase in population, but he believes that may show people are moving into town to be closer to essential services.

“Our ability to pay for services is disappearing.”


Municipality of Digby

In a statement accompanying the Financial Condition Index report, the Municipality of Digby said it was “pleased that in 13 of the 15 indicators, we meet the rural threshold, and in six of the 15 indicators we exceed both the rural municipality threshold and the rural municipality average.”

Uncollected taxes in 2011-12 were 11.2 per cent, which is higher than the FCI threshold. The municipality said that included in the uncollected taxes for that year were a number of ‘owners unknown’ accounts that when researched were determined to be duplicate accounts. Uncollected taxes for 2013-14 are approximately 10.8 per cent which is a significant improvement but still slightly higher than the average. The municipality conducts a tax sale every year in order to collect taxes which are three years in arrears.

“The Municipality of Digby has not experienced any deficits in the last five years and our budget accuracy is above the indicators. The Municipality’s operating and capital reserves are better than FCI thresholds when our accumulated operating fund surplus, a form of reserve, is factored in.”

The municipality’s council has been gradually and carefully upgrading infrastructure, and by utilizing capital reserves, and taking advantage of federal and provincial funding programs, has new infrastructure without accumulating any debt, said the statement.

The municipality said it still has significant capital reserves but has not transferred funds from accumulated surplus to the capital reserves, which once transferred must be used for capital purchases.