Government of Nova Scotianovascotia.ca
gov.ns.caGovernment of Nova Scotia Nova Scotia, Canada
 
Municipal Affairs
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Indicator Definitions

Each indicator has a technical definition that describes how it was calculated. The definition explains the meaning of key terminology and what the indicator is measuring. It provides information to consider when interpreting the indicator results and other indicators that measure similar aspects of a municipality's performance.

Select an indicator to display the technical definition:

 

Debt Service (%)

Threshold

15% or less

Formula

Principal and interest paid on long term debt ÷ Total own source revenue

Technical Definition

Principal and interest paid on long term debt: Total of gross debt expenditures, including interest, principal payments and capital lease costs made in the fiscal year

• FIR Schedule G - 1021721, 1021722, 1021790, 1022721, 1022722, 1022790, 1023721, 1023722, 1023790, 1024721, 1024722, 1024790, 1025721, 1025722, 1025790, 1026721, 1026722, 1026790, 1027721, 1027722, 1027790 and add back FIR Schedule H - Lines 1061010 and 1061020

Total own source revenue: All revenue earned by the municipality in a fiscal year including taxes (net of mandatory education contributions, transfer to correctional services and deficit of regional housing authority ), grants in lieu of taxes, service provided to other governments, sale of services, and other revenue from own sources

• For March 31, 2012 year: FIR Schedule E - Lines 0011000, 0012000, 0013000, 0014000, & 0015000

• For March 31, 2013 and 2014 years: FIR Schedule E - Lines 0011000, 0012000, 0013000, 0014000 and 0015000 less Lines 1022220 and 1025310

• For March 31, 2015 year: FIR Schedule E – Lines 0011000, 0012000, 0013000, 0014000 and 0015000

Rationale

Municipalities are not allowed to incur debt as a result of operating deficits, but they are allowed to borrow funds to purchase/construct capital assets. The debt service ratio provides an indication of how much of a municipality’s revenue is devoted to debt repayment. Own source revenue is used instead of total revenue to allow analysis of only the revenue within council’s control.

Interpretations

A high number may indicate the municipality has borrowed a large amount of debt. This could limit its ability to borrow in the future, and paying the debt expense will tie up operating revenue. However, it is important to note that a municipality with an aggressive debt repayment schedule will have a higher debt service ratio due to the larger principal payments.

A low number may indicate that the municipality has deferred capital projects to keep budgets low. This could negatively impact asset planning and the quality of infrastructure in the community. Additional investigation into the municipality’s debt management policies should be made before drawing conclusions regarding it’s responsible debt and capital asset management performance.

Data Source(s)

  • Municipal Financial Information Return (FIR) - General Operating Fund (non-consolidated)

Related Indicator(s)

  • Total Capital From Operating
  • 5-year Capital Purchases
  • 5-year Contributions to Capital Reserves