Reducing the municipality’s debt
‘We’ve certainly come a long way’
The Cape Breton Regional Municipality is $73 million in debt, but that number pales in comparison to what other governments owe in Canada and across the world.
The CBRM has a present longterm debt of about $49 million, but that figure will rise once monies are borrowed for upcoming capital projects.
But as bad as $73 million sounds, the cash-strapped municipality’s debt has slowly been coming down, according to chief administrative officer Marie Walsh.
“Over the past few years council has certainly bought into the notion that it’s important to pay down the debt — I don’t know if we’ll ever be debtfree, but at least we’ve certainly come a long way,” said Walsh,
who served as the CBRM’s chief financial officer prior to her appointment last summer to the CAO position.
“We have become more strict about our borrowing and we developed a policy that we would only borrow half as much as we would pay down, but as it stood, when council would pass the capital budget, they would pass projects based on other (government) levels of funding, but a lot of the times funding didn’t come through so the project didn’t happen, so each year we were able to bring down the debt more and more.”
Walsh noted that the municipality
was able to reduce the debt by more than $3 million over the last fiscal year. And she added that the $9.9 million spent on the debt is down from a high of $18 million that the CBRM spent on it a few years earlier.
She explained that in 1995, the CBRM inherited a collective debt of about $58 million when it was established with the amalgamation of the former city of Sydney, the towns of Glace Bay, North Sydney, Sydney Mines, New Waterford, Dominion and Louisbourg, and the County of Cape Breton.
Since then, it climbed to a peak of about $110 million in 2010 before being paid down to its present amount. And, according to Walsh, the lower it gets, the more money the CBRM will have to spend on both its operating and capital budgets, which for the 20182019 fiscal year are set at $147 million and $34 million, respectively.
“We borrow for our infrastructure — some municipalities have capital reserves that they use to fund their infrastructure projects, but we don’t have that other than a little bit of reserve money, so we have to borrow for our roads and buildings. We can’t borrow for our operating budget, but we can borrow for our capital budget,” said Walsh, adding that the municipality borrows the funds it needs from the province.
“So, for a municipality of our size, the smaller the debt is the better, so when we do have money it’s great to be able to do capital (spending) out of operating (budget) and I think that’s our goal, the lower our debt gets the more it will free up some funds to help pay for our capital projects.”
In comparison to the CBRM’s $73 million debt, the Halifax Regional Municipality carries a debt of $240 million. The Nova Scotia government is more than $15 billion in debt, while Ontario’s is about $312 billion.
Canada’s federal debt is about $632 billion, while the combined federal and provincial debts have now topped the $1.4 trillion mark.