Halifax Index 2020

Finance & Taxes

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Municipality In Strong Fiscal Position Leading Into COVID-19 Crisis

In its 2020 budget, the Province of Nova Scotia allowed the net debt-to-GDP ratio to rise by 2 percentage points, back up to 35%. This change in policy was made prior to the COVID-19 crisis and is a divergence from the target set by the One Nova Scotia Commission to achieve a ratio of 30% or less by 2024. Compared to other provinces, Nova Scotia’s net debt-to-GDP ratio and net debt per capita are in the middle of the pack.

Municipal revenues and expenditures grew at a typical rate through fiscal 2018-19, bringing the operating budget close to $1 billion. Halifax Regional Municipality (HRM) continued its debt-reduction strategy by reducing the municipal tax-support debt for the 10th straight year. The municipality was in a good fiscal position leading up to the COVID-19 crisis.

COVID-19 Impacts

The COVID-19 crisis has put increased fiscal pressures on both the Province and HRM. Significant declines in GDP are expected in 2020, leading to lower tax revenues. Government programs to provide emergency support to individuals and businesses will be financed through borrowing. Combined with a decline in GDP, we expect debt levels to rise substantially and the debt-to-GDP ratio to worsen.

HRM revised its annual budget before it was ratified, making $85 million in cuts to mitigate the significant losses in revenue anticipated as a result of the COVID-19 crisis. Governments around the world are facing tough fiscal decisions throughout the crisis and will continue to face challenges as we emerge from it.

Halifax Index 2020
Provincial Finances

In its latest budget delivered in February 2020, the Government of Nova Scotia forecasted the provincial net debt at the end of the 2019-20 fiscal year to be $15.2 billion. This works out to approximately $16,000 per Nova Scotian and 33% of provincial GDP. In addition, there is approximately $19,000 of federal net debt for every Canadian.

Today’s debt represents money that ultimately will have to be paid back by tomorrow’s Nova Scotians, including residents of Halifax. When debt-servicing costs remain reasonably low relative to income streams, there is no need for alarm, but if they grow rapidly and challenge the debtor’s control, governments may resort to austerity measures: tax increases and/or spending cuts. These will impact the well-being of our residents and our businesses.

Consistent with the One Nova Scotia Commission’s goal of reaching a 30% net debt-to-GDP ratio by 2024, the provincial ratio has been trending downward, going from 38% in 2013-14 to 33% in 2019-20.

Prior to the COVID-19 crisis, this year’s budget marked a change in direction allowing for the ratio to rise to 35% by 2023-24.

Given the economic crisis that has followed in the wake of the COVID-19 public health crisis and the province’s response to it, we can expect GDP to drop and provincial debt to rise substantially. As such, the debt-to-GDP ratio will worsen substantially. The province may be facing tough fiscal decisions once the crisis has subsided.

(f): Forecast data
Source: Province of Nova Scotia, Provincial Budget

Provincial Net Debt-to-GDP

  • Nova Scotia’s net debt-to-GDP ratio reached a peak of 47.5% in 2000-01, and then declined steadily until the economic meltdown of 2008. After rising again to 38.1% in 2013-14, the downward trend resumed.
  • The provincial government had adopted the One Nova Scotia Commission goal of a 30% ratio by 2024, but this goal was abandoned in the most recent budget. From 33.0% in 2019-20, the ratio was projected to rise to 34.5% by 2023-24. However, the COVID-19 crisis will have significant effects on both GDP growth and debt levels. The net debt-to-GDP ratio will grow substantially beyond the projections contained in the February budget.

Source: RBC Economics, Canadian and Provincial Fiscal Tables

Provincial Net Debt Comparisons

  • According to the most recently available provincial budgets for fiscal year 2019-20, Nova Scotia was in the middle of the pack in terms of both net debt-to-GDP ratio and net debt per capita.
  • All provinces can expect a substantial decline in these numbers, but the relative impacts are not clear at this time, especially as oil-producing provinces are experiencing the additional impact of low oil prices.

Halifax Index 2020
Municipal Finances

In response to the COVID-19 crisis, HRM extended its deadline for property tax payments to June 1, 2020. Given this delay, expenditure and revenue figures were not yet finalized, and we can only report on planned spending for the fiscal year 2019-20.

Municipal revenues grew by 2.2% in fiscal 2018-19, reaching a total of $937.2 million. In its budget for 2019-20, HRM anticipated a typical 2.0% increase in revenues for 2019-20 and a slightly more modest 1.5% increase through fiscal 2020-21.

Property taxes brought in three-quarters of municipal revenue, growing by a typical 3.1% rate in 2018-19. Of all property taxes, 38% are generated from commercial property and 62% from residential property. A 19% reduction was budgeted for the deed transfer tax. Deed transfer tax revenues typically are much more volatile from year to year than property tax revenues.

HRM continued to pursue a disciplined debt-reduction strategy by budgeting to reduce tax-supported municipal debt by $4.5 million in the 2019-20 budget. This 1.9% reduction is on par with the 5-year average for annual reductions and brings total tax-funded municipal debt down to $235.7 million. Overall, HRM was in an advantageous fiscal position going into the COVID-19 crisis.

Municipal spending for the fiscal year is laid out in the 2019-20 budget. The largest share of the budget is devoted to fiscal corporate services (17.2%), mandatory provincial costs (17.0%), and policing (13.2%).

*Change in budgeting treatment of Halifax Stanfield and Irving taxes between 2014 and 2015
(f): Forecast data
Source: Halifax Regional Municipality, Financial Policy and Planning

Municipal Revenue by Source

  • Property tax revenue is expected to increase by 3.4% as budgeted for fiscal 2019-20. Tax agreements are expected to grow by a modest 0.8%, payments in lieu of tax by an above average 7.4%, and other revenue sources remaining relatively unchanged.
  • Revenue from the deed transfer tax is expected to decrease by 18.6%. This revenue typically varies substantially year to year.

Source: Halifax Regional Municipality, Financial Policy and Planning

Tax-Supported Municipal Debt

  • The 2019-20 budget was the 10th straight year of debt-reducing budgets for HRM, putting it in a good fiscal position leading up to the COVID-19 crisis. As usual, HRM reduced debt by 1.9% in the 2019-20 fiscal budget.

Source: Halifax Regional Municipality, Financial Policy and Planning

Municipal Spending by Department

  • The two most significant items of spending in HRM's 2019-20 budget are fiscal corporate services and mandatory provincial costs, which include non-business unit corporate expenditures for the municipality (such as debt servicing and interest payments, interdepartmental expenses, and office and building costs) and payments to the province for select services, including education, fire, corrections, and housing.
  • Read more about municipal spending in the 2019-20 budget.


Halifax was the 3rd-fastest growing Canadian city in 2019. We gained nearly 10,000 new residents and broke our own population growth record for the 4th straight year. Immigration continues to drive population growth and enrolment at our universities is growing.



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