Halifax CAO says poor fiscal transparency grade not 'completely accurate'

Halifax has received a barely passing grade on fiscal transparency from a Canadian think-tank, but the city's top bureaucrat says she doesn't put much value in the ranking.

The C.D. Howe Institute gave Halifax a D- in its annual fiscal accountability report card of major Canadian municipalities for 2024.

Nicholas Dahir, a research officer with the institute, said Halifax lost points for passing the 2024 budget after the fiscal year started April 1, and using different accounting standards for its budget and financial statements.

"They don't present the numbers on the same basis. You're counting apples at the start of the year and oranges at the end of the year," Dahir said Tuesday.

Dahir said Halifax follows public sector accounting standards (PSAS) for its financial statements, which show the "entire scope" of the city's activities and how assets like roads and bridges are paid off over years.

This provides an accurate picture that captures the city's capacity to deliver its services, Dahir said, but Halifax's budget documents don't use this method. Instead, items are presented on a cash basis, he said.

Understanding budget 'daunting challenge'

For example, he said if Halifax were building a bridge, the cost would be listed as $10 billion in budget documents, but no such number would be in the financial statement for that year because the cost would be spread out over the lifetime of the project.

"You shouldn't need to be an expert in accounting to be able to understand the budget," Dahir said.

"Maybe for councillors who have access to the experts, that's mighty handy. But for everybody else, it's a daunting challenge that need not be there. And it simply confuses things."

Cathie O'Toole, Halifax's chief administrative officer, said she was disappointed to see a low grade but disagrees with the institute's methods.

"When I read through it, I can see there's a little bit of confusion between what's budgeting and what's accounting, basically, in terms of how they're doing some things," O'Toole said last Thursday.

"I would not say that it's a completely accurate assessment."

O'Toole said she doesn't give the report card the same credence as peer-reviewed research or the Government Finance Officers Association.

That association represents thousands of finance officers across the United States and Canada, and recognizes municipalities in both countries for best practices in budgeting. It named Halifax a budget award winner in 2023 and 2024.

O'Toole said Halifax's municipal auditor general will examine the city's capital budget process this year, and any recommendations stemming from that report will be key.

"I would be more concerned if the municipal auditor general comes back and made some of those observations than I would be about anything from the C.D. Howe Institute — because, you know, just the thoroughness and the accuracy of the work that they do," O'Toole said.

Halifax has been in the D range of the report card since 2021.

Dahir said he's accustomed to people disagreeing on how to grade fiscal transparency, but many municipalities in Canada include PSAS methods in their budgets. Those include Markham, Ont., Quebec City, Saskatoon and Winnipeg.

Even simply adding some tables from the last year's financial statements as an appendix to a budget could push Halifax into a B grade, he said.

"If they presented the budget on time, they might even get an A," Dahir said.

That change might be coming soon. Earlier this month, regional council approved a request from Mayor Andy Fillmore to have staff create a report on improving the budget process for 2026-27.

The report will examine any savings in the capital and operating budgets, and consider shortening the process so the budget is approved by the end of February and before the start of the fiscal year.

That report is expected to come to councillors by June.