Saint John faces 'terrible' dilemma over proposed reforms, says ex-premier's chief of staff

Brian Gallant's former chief of staff says Saint John city council finds itself in a "terrible" dilemma as it wrestles with whether to endorse a report on possible fiscal reforms.

Jordan O'Brien says the proposals, released last month by the Blaine Higgs government, are "not that bad" but don't go "as far or as fast as we had had in mind."

The report by a working group of provincial and city officials was the product of a three-year, $22.8 million financial aid package the previous Liberal government put in place for the city in late 2017.

O'Brien said the proposals put council in a difficult position because they could take several years to implement, and the city faces the expiration of the three-year funding agreement next year.

"Changes need to happen right away if they're going to keep the situation in the black," he said in an interview with CBC's Information Morning Saint John.

Debate over report

The Higgs government released the report last month. It proposes a review of the city's property tax base, including industrial assets, and of how regional services are administered and funded.

Saint John city council debated the report at a July council meeting but could not agree on whether to accept its recommendations. Mayor Don Darling cast the tie-breaking vote to put off the decision until the next council meeting, which takes place tonight.

Gallant promised the package in September 2017 as Saint John city council faced the prospect of deep service cuts to balance its 2018 budget.

The three-year funding deal "was there to create some time and space to get the more substantive reforms in place," O'Brien said.

MacPherson's audit said the city "leveraged" the looming provincial election to get the Liberals to offer the deal. But O'Brien said the pressure was coming from the city's need to make decisions about possible cuts in its 2018 budget.

O'Brien said the cuts council would have needed to make in 2018 without the bailout would have made the city less attractive to newcomers, driving more people to outlying municipalities and deepening the city's fiscal challenge.

They had indicated that it was perfectly appropriate, legally, and unfortunately the current government didn't see fit to release those legal opinions.- Jordan O'Brien

"These sorts of the cuts, we felt, would put an end to that progress and send things back in the wrong direction."

Because the province is ultimately responsible for municipal debt, "the risk of not acting was a lot bigger than the risk of acting," he said.

Opinion challenged

O'Brien recently published a newspaper opinion article challenging Auditor-General Kim MacPherson's recent audit of the bailout.

He said that she lacked key information and that her conclusion that the Liberals violated two provincial laws was contradicted by legal advice from government lawyers.

MacPherson was denied the right to see that advice by the current Progressive Conservative government, O'Brien said.

"She did a really good job," O'Brien said. "She always does. but you know, nothing's perfect."

MacPherson's audit in June said the government circumvented" the Local Governance Act and violated the intent of the Financial Administration Act.

O'Brien said government lawyers had advised him and Gallant that there was no legal concern.

'Perfectly appropriate'

"They had indicated that it was perfectly appropriate, legally, and unfortunately the current government didn't see fit to release those legal opinions to her, so she wasn't able to rely on that information," he said.

O'Brien also disputed MacPherson's conclusion that the bailout package was out of the norm and would give the city an incentive to keep running deficits.

He said the funding was no different from money the province transfers to all municipalities for a range of projects and services.

"Without those dollars, many or most municipalities would be running deficits every year," he said.

MacPherson stood by her conclusions earlier this month after listening to two days of witnesses testify about the deal at the legislature's public accounts committee.

"The agreement did not include specific outcomes to be achieved and has failed to effectively address the city's challenges or mitigate inherent risk to the province," she said at the time, repeating her main criticisms.

MacPherson's spokesperson said Monday she had no comment on O'Brien's interview.