Jim Guy

A retired political science professor from Cape Breton University says small, rural towns such as Parrsboro need more financial support from the province.

But instead of helping smaller municipalities cope with population declines and a shrinking tax base, Jim Guy says the province encourages them to amalgamate with larger municipal units.

He argues, however, that amalgamation won’t solve core problems such as out-migration and declining tax revenues.

“Amalgamation makes a lot of sense from the point of view of an assumed efficiency of government,” he says, “but on the ground level, it doesn’t always produce that result.”

Guy adds that, under amalgamation, citizens have fewer representatives to deal with their problems.

“What is being lost of course is the representation of local interests,” he says, “and so the voices of those people to express concern about population decline, for example, or businesses that are going under and constantly bring it to the attention of the council, is lost.”

He says that as a political science professor, he has always felt that representation is essential to survival.

“For communities to last, they need to have voices of concern and if you dwindle those voices you actually weaken the whole structure.”

Equalization as a financial solution

Last year, Professor Guy wrote a column for the Cape Breton Post in which he argued that the province is obligated to transfer a greater percentage of the equalization payments it receives from Ottawa to help municipalities provide essential services at comparable levels of taxation.

Current figures show that the province transfers just over $32 million to municipalities, less than two per cent of the $1.6 billion it now receives from the federal government. The rest goes into general revenues. Guy argues those general revenues are used to pay disproportionately for government services in the Halifax Regional Municipality which now has more than 40 per cent of Nova Scotia’s population.

In Parrsboro’s case, the town received $437,118 in equalization from the province in 2006/07, an amount that has now been cut to $365,901 in the current year. During the same period, federal equalization transfers to the province rose from more than $1.3 billion to over $1.6 billion, an increase of $233 million.

Property taxes

Charles Sampson, chair of the Sydney-based group, Nova Scotians for Equalization Fairness, points out that the federal equalization formula includes money to top up property tax revenues in poorer provinces.

He argues that since municipalities rely heavily on property taxes, the poorer ones should be getting about 26 per cent of the equalization money instead of less than two per cent.

“The federal amount of money, the equalization that comes down (from Ottawa) is in no way following the amount of money allocated in the formula for municipalities,” he says “and that’s why what you’re seeing now is these various municipalities as a consequence of the gross underfunding, they’re failing.”