CBRM could see $1M year-end surplus if Mother Nature co-operates

Cape Breton Regional Municipality is projecting a $1.2-million surplus by March 31, but Mayor Cecil Clarke is not in a hurry to spend the potential windfall. 

He said there's lots of winter left before the end of the fiscal year and anything can happen.

For example, Clarke said, last February, CBRM was hit with 150 centimetres of snow in one weekend.

"That's the operative word: 'potential' surplus position," he told reporters after a committee of the whole meeting Tuesday.

"And what was noted was we are at the height of potential winter weather and the volatility as was demonstrated last February can blow that up and have it be gone overnight in one weather event or any extraordinary things that can happen."

Jennifer Campbell, CBRM's chief financial officer, said that one weekend storm last year cost the municipality about $3.8 million. Luckily, she said, the rest of the winter was not too bad.

In December, Clarke had mused about a possible deficit this year, suggesting staff were beginning to look at areas where spending could be cut, if necessary.

Tax cuts possible?

This week, he said it's not the time to loosen the purse strings and he's not only thinking about how to hang on to the possible surplus, but how to grow it for the benefit of taxpayers.

"A forecasted surplus is helpful, but part of what I talked about during the election campaign was needing to get more of a surplus so we can start looking at how to reduce tax rates," the mayor said.

However, he said, it's too soon to say whether that could happen this spring.

Campbell said the surplus is made possible by a variety of unexpected revenues and reduced spending in various departments.

One of the key factors is $800,000 in surprise revenues from property sales.

"The housing market is still pretty hot in CBRM," she said.

"Most significant this year, we're seeing a number of ... high-value apartment buildings that have been selling, that of course lend themselves to very high deed transfer tax revenue."

Also, a significant number of staff positions have not been filled.

"That's the primary driver for the surplus is that timing of when staff depart versus when the position is refilled."

Campbell also said the projected surplus represents less than one per cent of the $170-million budget, so it is slim.

She said the financial forecast presented to council Tuesday shows the projected surplus is about $1.5 million, but in December council agreed to spend $300,000 on a piece of property near the Centre 200 arena to build a transit hub and possible expansion of the arena, leaving a projected net surplus of $1.2 million.

Unexpected costs could affect surplus

Apart from severe winter storms, any large infrastructure failure or other surprise expense could eliminate the projected surplus, she said.

"There are a number of factors that are completely outside of our control that we may not have planned for that could influence our final year-end result."

Just this week, council authorized the expenditure of roughly $265,000 to dig a new well for the Sydney water system, but staff say that money will come from the water utility's operating surplus.

During the meeting, Coun. Steve Parsons pointed out that chief administrative officer Marie Walsh left the position last year and was replaced by solicitor Demetri Kachafanas, whose role is now being outsourced to Sydney lawyer Robert Sampson.

Some contingencies built in

He asked whether those costs could affect the potential surplus.

Campbell said both the CAO's budget and the legal budget contain contingencies and a position in the legal department has gone unfilled.

"While it's not a one-to-one offset, it's not going to put us in a deficit position, because we had savings in other areas within those budgets to offset those increased costs," she said.

"I'm hopeful that the results that have been put together are as accurate as possible."

MORE TOP STORIES