NS: Loss of mill taxes too 'damaging', says Richmond County

Nancy King
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The Cape Breton Post

Pacific West Commercial Corp., the company working to buy the NewPage mill, is seeking to have the Supreme Court of Nova Scotia throw out the provincial legislation that sets the amount it pays in municipal taxes.

Workers are seen outside the NewPage mill on Monday.

[POINT TUPPER, NS] — If the tax revenue Richmond County receives for being home to the NewPage Port Hawkesbury paper mill is significantly reduced it will place a heavy burden on other ratepayers and lead to greater decline, court documents say.

Pacific West Commercial Corp., the company working to buy the mill, is seeking to have the Supreme Court of Nova Scotia throw out the provincial legislation that sets the amount it pays in municipal taxes. Richmond County will fight the action during a hearing Thursday.

Pacific West has filed with the court an appraisal of the mill and site buildings that lists their value at $20.9 million. Pacific West is paying $33 million for the mill. If it was to pay municipal taxes based on the value in the assessment, its tax bill would be $420,090, not $2.652 million.

In an affidavit flied with the court, Richmond County CAO Warren Olsen said the tax deal allowed the municipality to approach its annual budget with a degree of certainty. The potential loss of revenue will result in a more tentative process, he said, noting they won’t know what the mill’s tax assessment will be in 2013 or 2014.

“We will lose much of our ability to make multiple-year commitments to any project or program, which in turn reduces the number and effectiveness of such projects or programs,” Olsen said.

Richmond County chief financial officer Stewart MacDonald stated in an affidavit that the potential loss of $2.23 million in tax revenue and resulting budget shortfall of about $1.86 million would require an increase in residential tax rates of 26.5 per cent, an increase in commercial rates of 25.7 per cent, or spending cuts of $1.86 million, or a combination of cuts and tax hikes.

The base residential tax rate currently stands at 75 cents per $100 of assessment, while the base commercial rate remains at $2.01 per $100 of assessment.

The municipality has a $13.5-million annual budget, $10.7 million of which is considered non-discretionary spending, mandated by legislation or municipal bylaws. Total property tax revenue in 2011-2012 fiscal year was almost $9.2 million. The potential loss of $2.23 million would represent a 24.3 per cent decline in the municipal tax base.

“On that basis, I do believe that an increase in tax rates in this order would likely force many residents and businesses to leave the municipality or close, further eroding the tax base and worsening the problems the municipality already faces: outmigration, population decline, youth exodus and an aging population,” MacDonald stated.

In an affidavit, Pacific West restructuring manager Marc Dube said that since 2008 the paper industry has suffered from challenges, which has affected the value of the mill. Since the legislation was enacted in 2006, NewPage sold lands for construction of a biomass plant, as well as its biomass boiler.

Dube said getting rid of the tax deal is an important element of the Pacific West’s efforts to reduce costs and restructure the business.

“In attempting to counter net losses in the magnitude of $19 to $46 million per year, an additional cost of more than $2 million per year beyond the anticipated and budgeted costs is substantial,” Dube said.

On Tuesday, the Strait area mayor and wardens sent out a news release indicating they support Richmond County in the tax dispute.

Organizations: West Commercial, Supreme Court

Geographic location: Richmond, Nova Scotia, Cape Breton

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  • Reason
    September 13, 2012 - 14:55

    Funny how NS Taxpayers should subsidize these jobs, NS power consumers should subsidize these jobs, federal taxpayers should subsidize these jobs, but for the taxpayers where the jobs exist it's an unfair burden

  • johnny smoke
    September 12, 2012 - 19:32

    I am moving forth with to Richmond County, a tax rate of $.75 per $100? Are you serious? Here in good old New Glasgow we labor under a mill rate of $1.82 or so? Now tell me truthfully what do we get for the extra $1.07 per $100 that Richmond county does not get. ----------------I thought so, and not only that they have fewer public employees, fewer pot holed streets, and of course fewer flower pots, and they still cannot bear the brunt of downsizing, I wonder if New Glasgow had to downsize what the reaction would be, too horrible to even contemplate .

    • Metazip
      September 14, 2012 - 08:38

      Always said this taxpayer funded deal was no deal. Assessments should be based on what they are paying for the property period! Now if there was a deal struck with the province, then the deal should stand, or what else are deals for? If they don’t like the deal, then walk away. Wouldn’t hurt my feelings, or my provincial taxes. Would have been better off to take half the taxpayers’ money earmarked for this deal and retrain the workers and help the municipality out financially until they got back on their feet. Oh yeah! Nova Scotia Power is partners in all this too. Another annual bonus for those execs while we have to pay higher electric rates. I don’t think the NDP is any different from the other two parties to let all this crap continue to go on. No justification for any of this. Follow the money to see who the greedy ones are...