Town of Shelburne lays its cards on the table
Town facing financial difficulties, public input session scheduled for Feb. 6
About 60 people attended a special Shelburne town council meeting where the financial cards were laid on the table.
And it’s not a winning hand. With projected operating deficits estimated at $180,000 a year over the next five years, and a breakdown in consolidation talks with their neighbouring municipal unit, the town says it has been left in a position to decide between dissolution and significant cuts in service.
“Our revenues are not able to keep up with our expenses,” said CAO Darren Shupe, during the power point presentation that explained the town’s current financial position, how it got here and what the options are going forward.
“The three bottom lines for all of us to consider is at our current debt levels the province has put a freeze on any further borrowing so we have no ability to borrow for projects going forward, except for federal gas tax money which is limited to certain criteria. That limits our ability to plan,” Shupe said at the Jan. 27 session.
The town’s current budget limitations means there’s “no ability to grow our reserves, so no ability to do projects going forward,” Shupe said.
Financial Condition Indicators (FCI) provided by the province in February 2019 flagged the town’s operating and capital reserves as red.
“The position of the province is the town does not have sufficient reserves needed to address unexpected events or provide flexibility for future projects,” Shupe explained, saying a set of projections produced last spring indicated the overall trend is that the town is depleting its reserves and with no ability to replenish them.
"That presents a very serious set of problems and limits our ability to maintain our assets going forward,” said Shupe.
To close the financial gap in the operating budget, $2.5 million in new revenue is required, which could be accomplished with tax increases or through service cuts, Shupe said, adding the financial model indicates that further tax increases will not be productive because more households won’t be able to pay their taxes, resulting in more property tax sales and diminishing returns.
The town’s financial situation “didn’t happen overnight,” said councillor Harold Locke.
“We are in a situation where bad decisions were made by this council and previously councils over the past 20 years," he said. "We decided as a group we have to do something about it.”
Locke said the town has also had some bad luck over the past year, with storm damages to the town-owned community centre located at the fire hall on King Street, flooding at the King Street Centre, and a fire at the Shelburne Harbour Yacht Club/Osprey Arts Centre building. Each incident cost the town $25,000 in insurance deductibles.
“Because of that our insurance premium is going to go up,” Locke said.
Locke referred to the recent wastewater treatment plant upgrade “that was forced upon us.” He said it ended up being $600,000 over budget, which the town was fully responsible for. He said the upgrade was “bad timing.” The reason for the overrun, he said, was because “everybody in Canada had to do the same upgrade at the same time so what did construction companies do? They’re going to put the quote thorough the roof.”
The debenture the town had to borrow for the project basically doubled because of the project overrun, pointed out Shupe.
Changing demographics, an aging population, aging infrastructure, limited revenue generation – it's a situation that isn’t unique to Shelburne, Shupe said.
“For areas outside of the golden radius of HRM that’s pretty much the case throughout the province," he suggested.
The three eastern Shelburne County units – the towns of Shelburne and Lockeport and the Municipality of the District of Shelburne – initiated a series of conversations last spring to determine whether consolidation, based on the WindsorWest Hants model, could occur in eastern Shelburne County.
Discussions reached a standstill, however, when the Shelburne municipality opted out of any further discussions unless the province was willing to commit to funding to assist in the renewal of Town of Shelburne infrastructure.
“With financial support from the province, we could continue discussions,” said Warden Penny Smith.
Shupe said the point of view from the province is they won’t consider general asks, but will consider specific requests for funding. The avenue for discussions “is still open although tenuous at this time,” he said.
The town hopes to keep the conversation going at a public meeting on Feb. 6 to be held at the community centre on King Street starting at 7 p.m. Windsor Mayor Anna Allen, who is a member of the Windsor West Hants Transition Committee, will be moderating the session.
The options that are available to the Town of Shelburne will be further discussed and questions from the floor will be accepted. The meeting is open to all residents of eastern Shelburne County.
“This is a really important discussion,” said Shelburne Mayor Karen Mattatall. “It’s important to come and ask questions and understand the challenges we are facing. It’s not simple. Nobody is happy we are having this discussion.”