New Brunswick could allow municipalities to run deficits to cover pandemic shortfalls

Click to play video: 'New Brunswick to help municipalities deal with budget shortfalls'
New Brunswick to help municipalities deal with budget shortfalls
WATCH: N.B. municipalities have been hit hard by declining revenues during COVID-19, but according to Premier Blaine Higgs the province may have a solution to help them. Silas Brown has more. – Apr 29, 2020

New Brunswick is likely to allow municipalities to run deficits this year, according to Premier Blaine Higgs.

Canadian municipalities are not permitted to run deficits by law, but some jurisdictions have already moved to change that in response to the free-fall in revenues caused by COVID-19.

British Columbia will also allow municipalities the option of racking up debt, while in neighbouring Nova Scotia loans will be granted to those who need them.

READ MORE: New Brunswick to keep borders closed to temporary foreign workers

Higgs said that he has been in touch with the province’s municipalities and will likely allow them to run deficits to help them survive the pandemic without making major cuts.

“We did speak about municipalities finances and the ability for municipalities to run a deficit and that would most likely be something that we would be considering the same as B.C. has done,” Higgs said.

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But according to the Union of the Municipalities of New Brunswick (UMNB) deficits are a very temporary solution to budget shortfalls and municipalities are still waiting to hear concrete plans from the province.

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“The trick with deficits is all it really does is kick the can down the road,” said UMNB executive director Margot Cragg.

“Eventually that money is going to have to come from somewhere and for municipalities that’s sooner rather than later. The challenge is that money is not coming back. These are not deferred revenues; this is money that’s gone away.”

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It’s estimated that New Brunswick municipalities will lose $10.5 million in revenue by July 31, but that projection was put together before the province released its recovery plan which could push that number even higher.

READ MORE: Coronavirus: New Brunswick records no new cases for the 8th day in a row

“The hole is getting bigger and meanwhile municipalities haven’t heard what’s going to fill it,” Cragg said.

The Federation of Canadian Municipalities has estimated that municipalities across the country could see revenue shortfalls of $10 to $15 billion and has called on the federal government to step in. The FCM has asked for $7.6 billion in direct aid and another $2.4 billion for transit.

When asked about the proposal on Wednesday, Higgs said that he would want any federal money to flow through the province.

Higgs said he’s committed to reviewing the individual case of each municipality in the province to ensure they get the help they need.

“We said we’d work with each municipality on a case-by-case basis because as you could imagine … the financials are very different now than they would have been two or three months ago,” he said.

“So we will continue that philosophy, we will work with each municipality on their situation and ensure that the province can be a partner on how they recover.”

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