Troubled Cape Breton village to carry on, but tax and utility bills to climb

The financially troubled Village of Baddeck in Cape Breton is going to remain a village for now, but residents and business owners are facing steep increases in tax and utility bills to maintain operations.

Nova Scotia Minister of Municipal Affairs John Lohr has given the municipality until May 1 to comply with nine orders, including one to produce audited financial statements for the past two years and one to draft a budget for the coming year.

Another was to hold an annual meeting of the electors.

"The Village of Baddeck and the village commission have gone through this rocky and scary year," commissioner Michele Stephens told the roughly 125 people at a meeting in the Inverary Resort on Monday. "If we view it as a business ... it is easy to see that our numbers are not ideal.

"We also know that there have been issues: mismanagement, misconduct, lack of oversight."

Still, the village should be allowed to carry on and make improvements, she said.

The commission fired its chief administrative officer last fall and brought in retired Richmond County and Port Hawkesbury CAO Maris Freimanis on an interim basis.

They also hired Sydney accounting firm MNP to get the books in order, but on Monday commission chair Bill Marchant said there was not enough time to get audited financial statements done.

The accountants also said no financial statement was done for one of those years, because the records were a mess and there wasn't time to straighten them out.

Back in February, Freimanis had said there was no way to meet the ministerial deadline and that the province had said there would be no extensions.

On Monday, MNP's Sonny MacDougall said the village has recorded increasingly larger deficits every year since 2019, with this past year's shortfall amounting to about $348,000.

According to provincial legislation, municipalities are not allowed to run deficits.

The commission was unable to create a proper budget for the coming year, he said, but projections prepared by Freimanis show the village will be short nearly $500,000 and will need tax and utility charge increases to make up the difference.

The numbers suggest a tax rate increase of 24 per cent, with residential taxes going from 21 cents up to 26 cents per $100 of assessment.

The commercial rate would also have to rise by six cents to 31 cents per $100 of assessment.

The current sewer charge of $2.75 per cubic metre would have to double to $5.45.

Water rates would have to increase significantly, possibly up to 80 per cent more, but a study would have to be done and approved by the Nova Scotia Utility and Review Board before an actual amount could be set, MacDougall said.

Freimanis also said further increases will be needed to boost capital reserves to replace aging infrastructure.

Motion to dissolve fails

The village will need roughly $800,000 in the near future for repairs and upgrades, including replacement of a sewage lift station estimated at $350,000 and another $100,000 for backup power for the water system, he said.

The village commissioners voted to start the dissolution process in November, saying they don't have the resources to continue.

However, electors overwhelmingly voted against that proposal at a public meeting the following month, saying they wanted access to the finances.

The ministerial order also called on the village commission to present at least three options for governance, but residents were told on Monday they had two choices: status quo, or dissolve. 

After the presentations, Marchant called for a motion from the floor to dissolve the village. After a few moments, one man moved the motion, but no one seconded it.

Marchant then declared the village will continue to operate and adjourned the meeting.

In an interview afterwards, he said the voters had spoken.

"I think it was made clear to them tonight that there will be an increase in all three costs — the area rate, the water rate, the sewer rate — and they seemed content with that," Marchant said.

Resident Katrina MacKenzie said tax and utility rate increases were inevitable, even if the village dissolved.

"It's going to be an increase, whether we stay a village or not," she said. "It's going to be maybe hard on some pocketbooks, but it needs to be done in order to maintain what we have."

People seem willing to accept an increase in tax and utility charges as long as services are maintained, said Stephens.

"We haven't had rate increases since 2013, so they're coming and the residents and the ratepayers know that and these are all going to be greatly contributing factors to how we get ourselves back on track fiscally."