Despite losing a court battle, the mayor of the Cape Breton Regional Municipality says he's ready to keep fighting the province in a dispute over funding that has already cost nearly $300,000.

John Morgan said Thursday he's ready to appeal a recent decision by a Nova Scotia Supreme Court justice who rejected the municipality's lawsuit.

If not, Morgan told CBC News, the options put forward by critics are much worse.

"The reality is their Plan B is a massive increase in people's property taxes rather than continuing to take on the province," Morgan said.

The CBRM accuses the province of underfunding it by $20 million since 1995, when Sydney and neighbouring communities were amalgamated into one municipality.

It argued that under Sec. 36 of the Constitution Act, the province has an obligation to provide a reasonably comparable level of service to residents for comparable taxation.

The municipality claims the province is not giving it enough money to provide that service, nor is it furthering economic development to close the gap with other Nova Scotia communities.

The province argued the municipality's complaint is about economic policy and therefore not a legal matter for the court.

Critical of judicial system

Nova Scotia Supreme Court Justice John D. Murphy agreed with the province, ruling there is no "sufficient legal component to warrant court intervention. If the court were to adjudicate the dispute, it would exceed its proper role within Canada's constitutional framework."

"This is a clear case where Nova Scotia has satisfied its burden and established that it is plain and obvious the claim is absolutely unsustainable," Murphy writes in his decision.

'It's tough to fight big government when you haven't got the money in the coffers.'—CBRM Coun. Kevin Saccary

Morgan is critical of Nova Scotia's judicial system.

"They are not tree shakers, is the best way to describe it. They are there because they are, for the most part, part of the establishment," the mayor said.

Though Morgan is ready to launch an appeal, he said it will be up to council to decide whether to continue with the lawsuit. The municipality has 30 days to file a notice of appeal.

So far, the municipality has spent $289,000 of a budgeted $600,000 on the lawsuit, Deputy Mayor Richard Fogarty said.

Coun. Kevin Saccary said the mayor may face a tough time convincing councillors that an appeal is worth the time and money.

"It's tough to fight big government when you haven't got the money in the coffers to fight the big fight. The best we can do, I guess, is continue to negotiate as we've done in the past," he said.

"When I think of an appeal and another $600,000, compounded by X number of dollars, we could certainly pave a lot of streets over the next couple of years."

Paving will be the least of council's concerns if the municipality drops its complaint, Morgan said.

"You will see de-population in this region at an unprecedented rate if we carry out the fiscal plan the province has for this region without challenge," he said.

But Premier Rodney MacDonald said the lawsuit was a mistake and the money for it could be better spent in the community.

"We believe we're fair to all parts of the province, including Cape Breton, the CBRM," MacDonald said, adding he's pleased with the court ruling.

Province pays $10K for affidavit

According to the Nova Scotia Department of Justice, a department lawyer worked on the case as part of his regular duties, but the province paid $10,000 for an external affidavit.

This is the first time a municipality has tried to use Sec. 36 of the Constitution Act to sue its province, said Tom Urbaniak, a political scientist at Cape Breton University.

Urbaniak said it was a good political strategy and a great way to get the attention of the public and provincial politicians.

"However, as CBRM proceeded with this case, it became clear that it saw this as a strictly legal strategy," he said. "So essentially relations with the provincial government were on hold as far as the political leadership of the CBRM was concerned until this was resolved, and that was a mistake."