42 Carmichael Court New Glasgow, NS B2H 5T2 (902) 752-0876 - PDF document

42 Carmichael Court New Glasgow, NS B2H 5T2 (902) 752-0876 Brianwhite2.ns@gmail.com Clerk of the Board Nova Scotia Utility and Review Board PO Box 1692, Unit “M” Halifax, NS B3J 3S3 To the Clerk and Members of the Board Re: M07050 – Application by the Municipality of the County of Pictou and the Towns of New Glasgow, Stellarton and Pictou for an order to amalgamate the municipal units I am a resident of the Town of New Glasgow, and a taxpayer in that town and also in the County of Pictou. I am a CPA, CA and have forty years’ experience providing auditing and advisory services to Nova Scotia municipalities and related organizations, including many in Pictou County. I am also a past president of the Pictou County Chamber of Commerce. During my tenure with the Chamber board and in later years I have advocated for changes to the municipal governance structure within Pictou County, including supporting amalgamation of the local government structures. When the Pictou County MOU process was first announced in the spring of 2014 I was at first only concerned with viability of the proposed process, but continued to believe the end objective of rationalizing the local government structure held merit. However, due to my concerns with the proposed process I did advocate for change in the proposal, and maintained an ongoing familiarity with the amalgamation proceedings as well as completing independent research on the topic. My research has involved several hundred hours of personal time commitment and included reviews of a number of studies on municipal amalgamation in Ontario and other areas and a detailed review and analysis of the various documents specific to this proposed amalgamation. Based on my research over the past ten months, I am less convinced of the inherent merits of municipal amalgamation in general, but more importantly, I am totally convinced that the proposed amalgamation in Pictou County is not in the best interest of the local residents. The length of my report provides an indication of the depth of my concerns with this proposal. The Executive Summary of my report which follows summarizes my research and analysis on this amalgamation and clearly demonstrates that this amalgamation is not supported by the evidence

provided by the applicants, and further shows that available evidence indicates that the proposed amalgamation will be detrimental to the area residents. I thank you in advance for considering my comments and analysis in your deliberations and decision on this application. Yours truly, Brian W White, CPA, CA

Executive Summary The Nova Scotia Utility and Review Board (NSUARB) has been requested to consider an application by the Towns of New Glasgow, Pictou and Stellarton and the Municipality of the County of Pictou for a voluntary amalgamation pursuant to section 358 of the Municipal Government Act (MGA). This report examines the numerous reports and documents presented by the applicants in support of their proposed amalgamation as well as extensive research on the effectiveness of municipal amalgamations in other areas. 1. The applicants assert that aging population demographics and employment percentages as well as the growth rate in commercial property assessment supports a change in municipal structure. They fail, however to provide any evidence that amalgamation will, or can, provide the purported benefits. An analysis of similar demographic information for the existing regional governments in Nova Scotia shows that there is little evidence that regionalization has resulted in significant improvements for those municipalities. 2. The applicants assert that an amalgamated municipal council of 11 elected members is the “right size”. This report shows that the same elected officials and staff have recently successfully argued before the NSUARB that a combined total of 29 elected officials was the “right size”, and the applicants have not provided any evidence to reconcile the two radically different positions. 3. The applicants project total capital spending of $69.2 million over the first five years, of which $32.3 million is planned by the existing municipalities. New spending of $23.9 million would be funded from new grants, reserves and increased debt, and would be equally available without amalgamation. Only $13 million of the proposed new spending results from the amalgamation process. 4. Despite the capital spending funded by significant injection of new money from the province, the assumed new capital grants, reserve drawdowns and new long term debt, the applicants project that three of five capital-related financial indicators will deteriorate over the first five years of amalgamation and two of those indicators will fall below the provincial minimums in year five. This clearly shows that the required changes will not be met by amalgamation. 5. The applicants project that without amalgamation they would have combined reserves of $11.7 million at the end of year 5. Under their amalgamation projections the reserves will be eroded to $5.3 million. It is difficult to characterize this as an improvement or benefit for the area residents. 6. The financial projections of the applicants show cumulative revenue increases of $2.9 million and expense reductions of $1.6 million over the first five years of amalgamation. The revenue increases are all temporary in nature and will discontinue after five years. $1.2 million of the expense reductions are discretionary and equally achievable without amalgamation. Thus the five year benefits that accrue from amalgamation total $3.3 million. 7. Based on municipal tax burdens across the province, it can be shown that cost reductions of $3 million per year are required to bring the amalgamated unit’s residential tax burden in line with the most efficient 25% of Nova Scotia municipalities – far in excess of the projected 5 year savings. 1 | P a g e

8. The applicants identify an annual revenue loss of $1.7 million that will occur in the sixth year of amalgamation, but ignore this in their financial projections and analysis. Based on applicant data, this revenue loss net of amalgamation related cost reductions will result in a 5.3¢ increase in tax rates in year six and beyond. This increase would appear to violate the MOU precondition of no material increase in County tax rates. 9. The applicants assert that economies of scale in excess of their projected amounts are to be expected. There is, however, an extensive body of research that shows amalgamation in Ontario did not lead to cost or tax savings, and that costs may be even higher than they would have been in the absence of amalgamation. In conclusion, the applicants have failed to provide evidence of positive social impacts from amalgamation, and have provided evidence in the form of financial projections that, when subjected to a rigorous review, show a significant negative financial impact arising from the proposed amalgamation. This analysis shows that the proposed amalgamation is NOT in the best interest of the inhabitants and should, therefore, be rejected. 2 | P a g e