The Audit & Finance Standing Committee met Wednesday, Nov. 15, to get an update on Halifax’s financial performance in the second quarter of this fiscal year. And there was some good news, as the city’s investments did okay in Q2. The city made $9.6 million from its portfolio during April, May and June 2023, including “operating fund investment income” of just over $4.2 million, about $700,000 more than the expected $3.5 million. Staff expect this trend to continue as long as interest rates remain high.
That said, as of Sep. 30 the HRM’s business units are running a projected deficit of just under $8 million, with most of the business units running at a loss in Q2. One of the only business units that’s helping to offset the massive drop in the deed transfer tax (an estimated $10 million) is transportation and public works, which managed to claw back over $600,000 of municipal driving subsidies through parking fees.
While the business units are on track to lose $8 million in the 2023/24 financial year, the separate budget category of fiscal services is projected to come out ahead nearly $1 million. That leaves a projected loss of $7 million through the fiscal year, which ends in March.
This deficit will be a hard one for council to deal with as they are not allowed, legislatively, to carry a deficit year to year. Mayor Mike Savage pointed out that not charging developers enough for development and allowing bad development is really coming back to bite the city this year. On top of that, Savage also pointed out that even though Halifax is one of the main drivers of the growth the province is seeing—and that the provincial government is benefiting from—the city isn’t reaping the benefits it expected from that growth. In fact, municipal financial reports regularly inform councillors that we have paid for growth, and continue to pay for that growth. Growth has not, yet, paid for growth.
This meeting was mainly one of information, a primer for what to expect in the coming budget season. Councillors have some hard choices to make in the very near future. Or they can do what they’ve done in previous years: Work really hard to get this budget over the line and hope against hope that next year it becomes easier to deal with the looming fiscal cliff of unsustainability.