Financial snapshot to show Amherst in good shape

Darrell
Darrell Cole
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Province to release numbers early next month on all municipal units

A soon to be released snapshot of the financial health of municipalities should be favourable toward Amherst.

A soon to be released snapshot of the financial health of municipalities should be favourable toward Amherst.

AMHERST – Figures to be released early next month on the financial health of Nova Scotia’s municipalities should portray Amherst in a favourable light.

“What this means is that we have done a pretty good job of financial management,” Amherst CAO Greg Herrett said after sharing the information with members of town council at their April committee-of-the-whole meeting. “Our revenue steams, while not growing by leaps and bounds, are fairly solid, we’re doing a good job adhering to our budgets – we haven’t had a deficit in 16 years, and our strategy of minimizing what we borrow by largely paying as we go is showing solid results in the debt and capital dimension indictors.”

The Financial Condition Index, or FCI, helps municipal councils and Nova Scotians make sense of municipal financial information by providing a variety of sources of information in a single document. The index is organized into three financial dimensions that focus on where municipalities get their revenue, how they spend their money, and how they manage their finances.

The index was developed jointly by the Province of Nova Scotia, the Union of Nova Scotia Municipalities, and the Association of Municipal Administrators. Thresholds are based on jurisdictional scans, literature reviews, and municipal consultations.

“The idea is to give municipal governments and taxpayers a sense of how their municipal unit measures up against both sector best practices and provincial averages,” Herrett said.

The index is broken down into three areas including revenue, budget and debt and capital dimensions.  The FCI adopts a system of red, yellow and green for ease of reference. Red indicating an index below the provincial threshold, yellow below the provincial average and green above both benchmarks.

In Amherst’s case, there were only one red and two yellows out of 15 with the remaining 12 being above both the provincial and sector benchmarks.“

“It’s a good indicator of financial health,” he said. “We’re in excellent shape.”

The one red indicator, in three-year change in tax base, is something being faced by most, if not all, municipalities in the province while a yellow indicator in liquidity is related to the fact Amherst initially financed its new sewage treatment facility from cash reserves as opposed to temporary borrowing before financing the project with long-term debt.

In terms of debt, Herrett said, the index shows Amherst has a healthy debt service ratio and healthy debt levels compared with others because the town has adopted a pay as you go approach to financing for most municipal projects as opposed to borrowing, expect on larger projects like the sewage treatment plant.

“We spend half a million dollars a year on capital directly out of the budget so we don’t have to borrow and it shows up in these good results,” Herrett said.

The municipal profile that’s included shows Amherst is growing in terms of population, although its assessment growth is limited and commercial assessment if flat because of some significant successful commercial appeals.

The index is expected to be made public following a series of municipal workshops and media briefings between May 2 and 7.

darrell.cole@tc.tc

Twitter: @ADNdarrell

Organizations: Union of Nova Scotia Municipalities, Association of Municipal Administrators

Geographic location: Nova Scotia

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Recent comments

  • Doug.P
    April 25, 2014 - 08:31

    Generally speaking, there always two set of books when it comes to politics: one set for the voting public to be seduced by, and the other which shows the true situation to the office holders. One can not claim a surplus and be so heavily borrowed in debt that any rise in interest rates or drop in tax base can bring it all down. The office holders are hoping you simply read the headline and be happy. The real picture is closer to the municipalities that are collapsing due to crushing debt and high taxes. Sringhill opted for an instan amalgamation due to bankruptcy, Amherst is taking the slower yet same action through the "shared services" model. Ask yourself one question: if the financial picture is as rosy as they portray, then why do we need to find a amalgamated partner to help pay for our service and debt loads? But never mind that citizen, everything is just fine! Nothing to see here.

  • Jim G
    April 25, 2014 - 02:32

    This is very promising and the managers of the town should be congratulated. Most governments cannot control their spending. There are two issues that need to be acknowledged. The first, the town had a population of approximately 10,000 in 1922 so the town has not really grown at all. This means young people have been leaving most likely because of lack of work opportunities. Still as long as budgets continue to be balanced this is a good thing. After correcting the typo from "expect" to "except on larger projects like sewer...". Proper financial management of capital projects is where debt is incurred to pay for the asset over the life of the asset. Paying for large assets that have a useful life of say 10 years or more with operating funds from 1 year or 2 years could cause the town to have a cash flow problem if it ever needs the cash for other short term needs. The pay as you go definitely saves interest and keeps the town in good financial shape. If the town ever starts to grow this issue will need to be addressed.