Good financial management is one of the cornerstones of the success and continuity of any municipality. In 2016-2017, 85.7% or 42 out of 49 municipalities in Nova Scotia met the low/moderate Financial Condition Index risk threshold (See ‘Deep Dive’ for information on the Financial Condition Index).
Many rural municipalities and small towns are facing demographic challenges. Slow-growing or shrinking populations can have a significant impact on municipalities’ fiscal outlook. The latest data shows municipalities in Nova Scotia are currently largely fiscally self-reliant and most have met their financial obligations without going into deficit in the last five years. However, only 55.1% of municipalities are in a good position to address unexpected or future needs.
Although some municipalities are experiencing multiple challenges, only 7 municipalities were assessed at a high risk for fiscal instability. They have been asked by the Department of Municipal Affairs for an action plan to address their immediate challenges. (See ‘Deep Dive’ for population and financial condition indicators).
What This Means
This means that a small number of Nova Scotia municipalities are experiencing significant financial challenges. However, looking at the economic and population trends, it is clear municipalities will face significant challenges in the future that they may not have the resources to address. This intensifies the need for municipalities to take innovative and collaborative approaches. Both can help mitigate risks associated with change, as well as accelerate economic growth and optimize community progress.