Amherst in good financial position to weather pandemic: CAO

AMHERST — Facing a major emergency, such as the ongoing COVID-19 crisis, is not something municipal administrators like to face, but Amherst's CAO feels an ounce of prevention is worth a pound of cure.

For several years, Amherst has been at or near the top of the province's financial conditions index. Greg Herrett believes that fact has helped the community deal with some of the uncertainty brought on by the pandemic.

“We've spent the last number of years building up a stabilization reserve and the theory always was this reserve would provide a cushion if there were an event that threatened the municipality financially,” Herrett said. “Our cash flow is pretty good because our tax collection is good and that's a testament to town staff, who have done an excellent job collecting taxes, and our taxpayers, who have done an excellent job paying their taxes.”

Herrett said the challenges faced by towns of a similar size to Amherst vary. Some larger municipalities, that offer transit services, are facing a huge challenge in lost revenues while smaller units will lose revenue from items such as the deed transfer tax and user fees on recreation programs.

“In Amherst, the revenue loss will be minor program fees and investment income on reserves if we have to use those reserves for cash flow,” he said. “The biggest one would be the deed transfer tax. Usually we collect about $250,000 a year, but there's no way to determine how much of that we'll get this year. We know we won't get $250,000.”

Overall, at this point, he expects the town could lose between $200,000 and $400,000 as a result of the pandemic, a number that's small considering Amherst's $18-million budget.

“That amount is manageable,” he said. “At this point we're not hiring summer students and not bringing back seasonal workers. There are nine or 10 seasonal workers in public works and recreation that we're not going to have on the job. Those reduced costs will offset the reduced revenues. That part is not catastrophic for Amherst.”

There are additional costs for personal protective equipment, but he feels it's much more manageable than similar costs for larger municipalities such as Halifax or CBRM.

“It's not a huge number, one that will create a big issue,” he said.

The biggest risk for Amherst is cash flow that comes from collecting tax revenue.

“Our interim bills are in the mail now and have a due date of May 31. We're not going to charge interest as long as people pay by June 30, that's what council decided the other night,” Herrett said. “There are a significant amount of people in the community affected by COVID-19 in that they lost their jobs, were laid off or they had to close their businesses. It's impossible for us to know with any degree of accuracy how that's going to affect people's ability to pay their taxes.”

Herrett said Amherst annually passes a temporary borrowing resolution of up to $2 million to cover any cash flow issues that come up between the time tax bills go out and when they're paid. It's seldom used, but it's there just in case.

Earlier this week, Amherst passed a borrowing resolution of up to $7.7 million.

“There's so much uncertainty with what's taking place we decided to bump it up to the amount that was approved,” Herrett said. “It's a calculation based on 50 per cent of last year's taxes.”

On Tuesday, the provincial government, working with the Nova Scotia Federation of Municipalities and the Association of Municipal Administrators, announced a new operating loan program to help municipalities through some of the financial challenges presented by COVID19.

This $380-million program is designed to help municipalities through financial issues associated with the pandemic. Herrett said it's not so much to make up for lost revenues as to provide a bridge until tax collection and, in some cases, payment arrangements are in place.

He expects individual municipalities will be considering an additional program soon for property owners impacted by COVID so they can apply to pay their taxes over a longer period of time.

“All those details aren't public yet, but there will be some information on that within the next few weeks that will outline who will qualify,” he said.

Herrett estimates it costs, on average, $1.5 million monthly to operate the town. A key message he and other municipal administrators have is for those people who can pay, is to pay their tax bills as quickly as possible because it's money towns and cities rely on to fund essential services such as police, fire, waste collection and other programs.