As Sable project winds down, MODG works on challenging five-year budget

By Helen Murphy    
January 31 2018

GUYSBOROUGH – Commercial tax revenues from the Sable Offshore Energy project did a good job of filling municipal coffers over the past two decades, but that revenue stream is starting to wind down. Without counting on revenue from proposed industrial projects, the Municipality of the District of Guysborough needs to plan on a leaner budget for the years ahead.

Over the past several years, MODG has absorbed more than a $1 million decrease in offshore gas revenue. CAO Barry Carroll says the municipality’s ability to respond to the decreasing revenues is helped by earlier council investments.

“One of the good things that MODG has done is the council of the day said we need to set aside a few dollars and reinvest dollars into business activities that could generate revenues in case, some day, those gas revenues aren’t there any more,” he told The Journal Tuesday. Those investments include the waste management facility and wind turbine projects including Sable Wind, both of which generate income.

“We knew Sable wasn’t going to last forever and we’re going to get through this, hopefully unscathed,” Warden Vernon Pitts said during an interview Tuesday. “Times were good with Sable on the go. It was a time of plenty.”

The warden said planning by council and staff has been ongoing in recent years for the decommissioning of Sable. “If everyone does their share and takes part in the heavy lifting, we’ll get through this. It’s not unsurmountable.”

MODG is currently working on a five-year budget forecast to get through the transition. Carroll says the task is “pretty daunting” if no additional revenues — such as from proposed industrial projects — comes into municipal coffers.

Carroll said the municipality has been very aggressive on the economic development front, including buying and optioning land to developers, which helps offset this downturn. But he said MODG cannot wait for the final investment decisions of proposed projects to plan for the years ahead.

“We can’t wait long to address this,” he said. “We’ll be in very poor shape if we leave it down the road to deal with it.”

Although the issue has been on council’s radar for some time, “we know that November of 2019 is being projected as last gas from the Sable project, so that puts the problem right on our doorstep,” said Carroll.

As for proposed projects, he pointed out that there is no real tax gains until a project’s construction is complete. “Five projects are in the works, but until decisions are made and are built, we can’t count on that revenue.”

Council spent a couple of days in meetings on this issue recently.

“There’s no one avenue to deal with this,” said Carroll. “It’s a $3 million problem...We have to look at all options on revenue and expenses sides, then do what’s best for the community.”

MODG met with the Guysborough and Area Board of Trade recently and shared information around the revenue challenge.

“MODG has to be strong so we ‘re not looking to strip down the organization,” said Carroll. “We want to continue to grow our community.”

Several proposed projects, including Black Point Quarry and Goldboro LNG, have final investment decisions slated for this year.

“If we can get a positive final investment decision and get into construction, we’ll be that much closer to finding a solution,” said Carroll.

MODG’s residential tax rate has flatlined since the Sable project came into operation. Increasing it is “the last step that council wants to take, but it’s one of the tools in the toolbox. Our assessments are relatively low and our tax rates are relatively low,” he said.

As council develops the five-year budget plan, MODG will share more information with ratepayers. Planning will continue in February and March, as the municipality hopes to adopt its new budget in March.