Provincial payments to dissolving communities in Nova Scotia: A comparison
By: Brian W White, CPA, CA
Summary:
The following graphs and comments provide detailed information comparing the binding Letter
of Intent (LOI) agreement between the four parties to the Pictou County amalgamation and the
Province of Nova Scotia with LOI agreements made by other Nova Scotia municipalities that
have dissolved in recent years. All settlements include 5-year equalization guarantees identical
to the equalization guarantee in the Pictou County LOI.
The Pictou County Amalgamation Letter of Intent (LOI) agreement with the Province for $27
million falls far below all other agreements on a per capita basis. This is true whether
equalization payments are included or excluded.
The Pictou County amalgamation LOI is substantially lower per capita than every other
municipality: only 23% of the next lowest (Springhill) and only 11% of the average of the three
highest (Bridgetown, Canso and Parrsboro.) In concrete terms, the residents of the four Pictou
County municipalities would receive support of $715 per person, while support for Springhill
was $3,123 per person, and support for Bridgetown, Canso and Parrsboro averaged $6,616 per
person.
These figures show that what the MOU Steering Committee describes as “a rare opportunity”
and a better deal than other communities is, in fact, the opposite.
There have been concerns expressed that amalgamation is needed because it would be
financially disastrous for the County if a town dissolved and became part of the County. The
figures below show that such concerns are groundless.
Considering settlements in other communities, a dissolving town would be likely to receive a
settlement from the province far higher per capita than the agreement negotiated by the MOU
Steering Committee, and would be likely to enter the receiving county in a healthy financial
situation, not as a drain on the county.
The information on settlement amounts for other municipalities was obtained from copies of
the signed Letters of Intent entered as evidence in the NSUARB Hearings on the respective case
files. The data on settlement amounts for Pictou County comes from the signed letter of intent
entered as evidence in the NSUARB case file M07050 for this application. Population statistics
were obtained from Municipal Profile data published by the Nova Scotia Department of
Municipal Affairs at http://novascotia.ca/dma/finance/indicator/municipal-profile.asp .
1
Graph 1: Letter of Intent settlement agreements including equalization payments as negotiated
between the Province of Nova Scotia and five dissolving communities compared to Letter of
Intent agreement for four units of Pictou County, on a per capita basis.
Comparison of Letter of Intent Funding
Per Capita for Dissolving Towns Including
Equalization
40000
35000
30000
25000
20000
15000
10000
5000
0
Table 1
Letter of Intent
Population
Total Funding Per Capita
Population
$ Per Capita
Bridgetown
Canso
Hantsport
Springhill
Parrsboro
New Municipality
6,942,371
4,172,000
4,165,425
12,080,690
10,376,949
27,721,534
949
911
1159
3868
1305
38762
7,315
4,580
3,594
3,123
7,952
715
Comment: As this graph and table comparing the full LOI agreements show, Pictou County’s LOI
provides substantially less funding per person than other municipalities: 23% of next lowest,
and a mere 11% of the three highest agreements.
2
Graph 2: Letter of Intent settlement agreements negotiated between the Province of Nova
Scotia and five dissolving communities compared to the Letter of Intent agreement with four
units of Pictou County, on a per capita basis, excluding equalization payments.
Comparison of Letter of Intent Funding Per
Capita for Dissolving Towns Excluding
Equalization
40000
35000
30000
25000
20000
15000
Population
10000
$$ Per Capita
5000
0
Table 2
Bridgetown
Canso
Hantsport
Springhill
Parrsboro
New Pictou Municipality
Population $$ Per Capita
949
3,041
911
3,142
1159
3,023
3868
1,595
1305
2,642
38762
409
Comment: This chart and table, showing only new money from the province, but excluding
equalization payments, show a similar pattern to the first. The differences are not as great, but
the four Pictou units still fall significantly below the other communities.
Graph 3: What if a town, for example the Town of Pictou, was forced to dissolve and join the
County? What financial assistance from the province would the town likely be entitled to,
based on settlements received by other towns which have dissolved recently in Nova Scotia?
3
Note: We have included this comparison because there appears to be an urban myth circulating
that up to three towns in Pictou County are on the verge of dissolution. It is unclear where this
myth originates, as the LCCM report to the UARB states: "... we feel that none of the Applicants
are in immediate financial distress and should be viable in the short term ... ".
However, since many people seem to believe the “about to dissolve and create a crisis so we
need to amalgamate now” myth to be true and a cause of concern, we felt it would be useful to
look at what type of settlement a dissolving town might reasonably expect to receive from the
province.
Comparison of Letter of Intent Funding to
Town of Pictou Potential
16,000
14,000
12,000
10,000
8,000
$$ Per Capita
6,000
Total $$ ('000's)
4,000
2,000
0
Table 3
Population
Total $$ ('000's)
Bridgetown
949
6,942
Canso
911
4,172
Hantsport
1159
4,165
Springhill
3868
12,081
Parrsboro
1305
10,377
Pictou - Low
3437
9,563
Pictou - High
3437
14,878
Comment: As the graph and table indicate, based on similar scenarios, if the Town of Pictou
were to dissolve, it could expect a LOI agreement of between $9.5 million and $14.9 million.
This would allow it to resolve outstanding issues and enter the County in a healthy financial
state with solid infrastructure.
These figures explode the argument that it would be financially disastrous for the County if a
town wanted to dissolve into the county. According to settlements in other communities, a
dissolving town would be likely to receive a settlement from the province far higher per capita
4
than the agreement negotiated by the MOU committee, and would be likely to enter the
county in a healthy financial situation, not as a drain on the County.
** Note: According to submissions to the Utility and Review Board (UARB), all four units are in
good financial health. The provincial Financial Condition Index for the four units show both the
County and Stellarton with only one red flag in 2014/15, Pictou with 3 and New Glasgow with 4.
Further, as summarized in the LCCM report:
"As can be seen from Table A, other than the Town of Pictou, the status quo projections
indicate fairly static property tax rates for the Applicants. With this said, it is unlikely
that the Applicants would change the tax rates each year as projected above, especially
when in some cases they fluctuate up and down more than once.
The largest fluctuation relates to the Town of Pictou’s tax rates. Its residential rate
decreases by $0.04 per $100 assessed value from year three to year four."
Graph 4 – If we view the proposed amalgamation as a dissolution of the three towns, and the
three amalgamating towns of Pictou County were compensated similarly to other Nova Scotia
municipalities which have dissolved.
Comparison of Letter of Intent Funding to 3
Town Dissolution
70,000
60,000
50,000
40,000
30,000
20,000
$$ Per Capita
10,000
Total $$ ('000's)
0
5
Table 4
Population
Total $$ ('000's)
Bridgetown
949
6,942
Canso
911
4,172
Hantsport
1159
4,165
Springhill
3868
12,081
Parrsboro
1305
10,377
New Pictou Municipality - Low
17484
39,749
New Pictou Municipality - High
17484
66,789
Comment: The MOU Committee describes the provincial funding agreement as “a rare
opportunity.” They further state:
"Our plan has secured funding for both rural and town infrastructure projects. This is
quite distinct from recent Nova Scotia dissolutions, in which towns become part of the
surrounding County government. Upon dissolution, provincial funding has been provided
to the dissolving town and no support has been provided to the receiving County."
While it is technically true that the money in the Pictou County LOI is allocated to all four units,
the amount of money received on a per capita basis is a fraction of the amount received by any
other dissolving municipality. This more than offsets any possible advantage of this agreement.
If this “rare agreement” is truly better than agreements which other communities have made, it
would be reasonable to assume that the per capita funding should reflect the sacrifices our
rural residents are making if amalgamation proceeds. This should be reflected in total
compensation amounts greater than the levels set out in the graph.
With no precedents to draw upon, we have not presented "sensational" data that might be
calculated using populations of all four amalgamating units. We simply observe that if, indeed,
the County were to benefit, there would need to be compensation at levels above that
provided in pure dissolution scenarios. That would mean that the total LOI funding would need
to be substantially above $40 million at a low and $67 million at the higher levels.
Calculating from the lowest per capita amount given to Springhill, a total package, including
equalization, of $40 million plus additional compensation to County residents would be in order
- more than $13 million higher than is being provided to the four units of Pictou County.
Calculating from the settlements to Bridgetown, Canso and Hantsport (all quite similar and not
the highest), the four units should have negotiated a LOI for between $60 and $67 million plus
additional County compensation – at least $33 million more than the $27 million provided in
the Pictou County Letter of Intent.
6