Municipal elections are important. Municipalities make decisions that impact our daily lives—from when we turn on the tap for clean water, or to when we need to get to work, or when we access public facilities such as libraries or community centres. Moreover, municipal services are funded by taxpayers’ dollars—municipalities spend a significant amount of public money each year, and residents should have more say over how these dollars are spent, and more say over how these services are designed and accessed within their communities.
Recent data shows that every county in Nova Scotia (though not every municipality) experienced population growth last year, meaning municipalities should have somewhat increased financial capacity in the next few years. In addition to increased revenue, the rapid population growth experienced in Halifax Regional Municipality and Cape Breton Regional Municipality comes with a series of challenges. Tens of thousands more cars are on the roads across the province, leading to increased traffic and pollution. The pressure on housing prices has been well documented, making our municipalities more expensive.
Municipalities also face insufficient funding from other levels of government to meet the increasing demand for services. Despite these constraints, it is still possible to move forward and begin implementing a vision for change. This vision includes ensuring all residents share in the wealth in our communities, making municipal services fully accessible to all, and protecting the environment—while seeking economic and social well-being for current and future generations.
Nova Scotia needs people who will turn the values of social and economic justice into concrete policy realities to improve their lives. We need municipal representatives who will demand climate action and help build local resilience. We need elected people who prioritize addressing rising hate that is increasingly directed at anyone who is deemed to be different. We need people who will work for the majority of people, not an elite few.
We hope those who are elected will find ways to build more engaged, stronger, and inclusive municipalities, where more residents are encouraged to be involved in their communities and reach out to their neighbours.
Working together is how we build healthy, thriving, and welcoming communities.
Fiscal Fairness: How Municipalities Can Equitably and Sustainably Fund Services
To fund high-quality, affordable, and accessible public services, municipalities must be willing to transform their taxing and spending based on the principle of fairness, considering individuals’ ability to pay, and seeking to address income and wealth inequality and insecurity.
The province’s most recent report on municipal finances in Nova Scotia found one region and three towns to be “high risk” regarding financial health. Property taxes are the primary source of funding for municipalities, though the amount of revenue from this source does vary. Property taxes are flat tax rates set by each municipality, not based on the ability to pay. Since 2007, the Capped Assessment Program (CAP) limits the amount the taxable assessment for eligible residential property can increase year over year to the Nova Scotia consumer price index; it applies to all properties except for commercial properties (including apartment buildings), new construction, non-owner-occupied condominiums, properties that have been purchased from a non-family member within the last year, and properties that are majority owned by out-of-province residents.
For most municipalities, relying so heavily on property tax revenue has put them in a fiscal straitjacket.
Given the significant increase in the consumer price index and housing value, a large portion of the value of housing is not taxed in Nova Scotia. Is it time to ease off the CAP? The Nova Scotia Federation of Municipalities has proposed a 13-year phase-out plan. That said, the CAP was brought in for a reason, namely that people were being forced out of their homes as the value of their homes was rising rapidly, well above increases in people’s incomes. These conditions continue to exist today.
The impact of removing the CAP at this point would be devastating to thousands of families in the province. The CAP is a symptom of a larger problem that can be addressed. Municipalities are overly dependent on property taxes—diversifying municipal revenue sources is the solution.
The Canadian Centre for Policy Alternatives-Nova Scotia (CCPA-NS) has published recommendations to move away from property tax to funding municipalities through income tax, a more progressive tax. This allows more flexibility in raising the necessary revenue to cover public services and should be considered in Nova Scotia either provincially or federally.
The most recent Canadian Centre for Policy Alternatives report on municipal taxes investigated how municipalities could decide to implement a local income tax if the federal government directed the Canada Revenue Agency to collect municipal personal income taxes. For example, a one per cent tax on the richest could raise tens of millions of dollars to pay for public services and infrastructure. For HRM, using a broader tax base—a one per cent point of municipal tax on incomes over $56,000—would provide additional revenue of approximately $45 million.
Advocating for Increased Equalization and Government Transfers: The provincial government should look for ways to increase the provincial equalization budget, allowing smaller and more rural municipalities to offer similar services. Creating some targeted revenue stream to fund this equalization, rather than funding it from general revenues, may provide municipalities with more stable, upward funding.
Recommendations:
Make the tax base more progressive, including shifting some of the municipal revenue base toward income and linking the property tax and fines to income;
Diversify the municipal revenue base to include new municipally owned business opportunities, such as green energy production, telecommunications and internet services;
Improve the fairness of municipal equalization funding by considering the full range of service needs and ensuring reasonably comparable services at reasonably comparable taxation levels, with a special focus on rural and remote municipalities.
Publish more transparent information—including analyses using an intersectional lens of budgetary spending and tax decisions—to produce more equitable and responsive policies, programs, and services.
