'The major issue is we have zero debt’
Town receives eight green marks, two yellow, five red
PARRSBORO – Town council here does not seem concerned about the red marks it received in a financial condition index (FCI) report issued by the provincial department of municipal affairs and the Union of Nova Scotia Municipalities (UNSM) earlier this month.
In fact, Parrsboro CAO Ray Hickey said a lot of things the town was criticized for in the report should actually be considered positive.
“Some of the categories and thresholds (Parrsboro received a red mark in) are very arbitrary, and it’s extremely debatable whether they are a bad thing,” he said.
For example, the town received a red mark in the Budgeted Expenditures category because it turns a surplus on average of about 8.8 per cent, and the threshold in the report was between -5 and 5 per cent.
Hickey said he received no explanation when he asked why an 8.8 per cent surplus would be considered bad.
“The town budgets for worst-case scenarios,” he said. “When we had a bad winter like we did, Cape Breton Regional Municipality ran out of money for snow removal in January. We didn’t. At the end of the year, if there is any left over, it goes into reserves to pay for the future. I don’t view that as a bad thing.”
Parrsboro was also criticized in the report for its lack of commercial property, but Hickey again argued that does not mean a community is not viable. He described Parrsboro as a bedroom community, where people often choose to live while working in other locations.
“Some of the best municipalities in the province like Mahone Bay and East Hants are thriving, but their role is people live there because it’s nice to live there, and they work in Halifax,” he said. “That’s not a bad thing.”
Another area of criticism in the report came in the category of 5-Year Contributions to Capital Reserves, where Parrsboro scored a 7.0. The town average is 13.8, and the town threshold is above 10.
“That one is absolutely ridiculous,” said Hickey. “The Municipal Government Act says that if a municipality transfers money to operating reserves, they can spend it on either operating or capital expenditures. If you transfer to capital reserves, then you cannot spend it on operating. So any wise municipality will put its reserves into operating, so they can spend on whichever they choose.”
Overall, Parrsboro scored positive green marks in eight categories, red marks in five, and yellow (meets the threshold but not the town average) in two. Among its green marks were areas such as debt and deficit, which Hickey considers key in determining whether a town is vulnerable or not.
Mayor Lois Smith, read a statement from the UNSM explaining that the FCI indicators are only a tool to help municipalities look at themselves, and “do not tell the whole story.”
“The major issue is we have zero debt,” said Smith.
The index was developed after a recommendation of the UNSM’s towns task force and was worked on by Municipal Affairs, the UNSM and the Association of Municipal Administrators.
The index for each municipality looks at how it gets its revenue and how it budgets for municipal priorities. There are 15 indicators that show a municipality's score, the average for its class (rural municipality and town) and the threshold, which is an achievement benchmark.
Each municipality has reviewed and approved its data and provided information to explain certain indicators, unique circumstances and trends. The index is available at http://novascotia.ca/dma/finance/indicator/fci.asp .