CBRM starts belt tightening in the face of a possible second deficit

Officials in Cape Breton Regional Municipality are starting to tighten their belts after a staff projection showed CBRM could be headed for another deficit.

Chief financial officer Jennifer Campbell said CBRM's $715,000 deficit last year was due to an unexpected spike in inflation and costs incurred cleaning up after Fiona.

According to her projections, the municipality could be headed for a $271,000 deficit, if the financial picture doesn't improve by next spring.

Cleaning up after winter storms is one of the biggest factors determining whether the municipality goes in the hole, Campbell said.

"Really, a lot of it is dependent on what kind of winter season that we have," she said. "The frequency of storms, how closely they happen apart from one another, fluctuation of temperatures, all drive the cost of delivering the service."

According to figures supplied to council in its agenda on Tuesday, overall revenues are projected to be over budget by $2.7 million, but costs will also be over by about $3 million.

CBRM chief financial officer Jennifer Campbell says even though staff budgeted for higher fuel costs this year, unexpected inflation increases continue to drive up the cost of operations. (Tom Ayers/CBC)

Inflation in particular is continuing to affect operations involving municipal vehicles and contracted services, Campbell said.

"We built in what we estimated the cost of fuel to be for those contracts and unfortunately it's fallen short."

CBRM is earning higher interest than expected on its investments, but revenues from recreation facilities have fallen.

The police department is expected to be under budget by about $1.2 million, driven largely by temporary staff vacancies, but the fire department will be over budget by $1.1 million, mostly due to staff overtime costs.

The largest budget variances are in engineering and public works, with $2 million in flooding costs and the ongoing cost of tree removal and disposal due to post-tropical storm Fiona.

Most of those costs are recoverable, said Campbell, except for the federal taxes on those costs.

Mayor Amanda McDougall says CBRM is starting talks now to get a handle on the finances and to be better prepared for budget talks in the new year. (Tom Ayers/CBC)

Mayor Amanda McDougall said it's not time yet to press the panic button.

"Absolutely not. This is why we're having these conversations in the open public forum to let the public know," she said. "Last year, we went into budget and it was extremely stressful. We had discussions over the course of three months and in order to be more prepared for budget this year, we're having these conversations now."

CBRM staff have implemented a freeze on all discretionary spending and the council and staff are planning a workshop next month to look for savings to try to make up the potential $217,000 shortfall.

Projected deficit relatively small: Campbell

"It does sound like a lot of money and I don't want to minimize it or not sound concerned about it," said Campbell.

"[But] it is a very small fraction of our budget. It's less than .2 per cent of our overall operating budget and I am quite confident that we can make up that loss before the end of the fiscal year, provided that the winter season comes and goes as expected and as budgeted."

CBRM does not yet have audited financial statements from last year, but Campbell said they will be ready within the next few weeks.

She said they show the deficit last year was $715,000, which council can recover by drawing on operating reserves or by raising taxes.

Campbell said council has said it does not want to raise taxes, so she expects they will opt to have the deficit covered by reserve funds.

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