Dwight Bishop released his 10-page report Thursday.

Several Nova Scotia municipalities that approved the expenditure of public money for the now-defunct South West Shore Development Authority had no authority to do so, the province's ombudsman says.

As a result, municipal taxpayers in nine communities have lost more than $200,000 in loans and some are on the hook for an extended line of credit of $590,000, Dwight Bishop said in a 10-page report released Thursday. The Royal Bank of Canada is now looking to get its money back.

"The municipal units showed a lack of due diligence in the stewardship of this money and administered funds contrary to law as contemplated in the Municipal Government Act," Bishop said in the report.

"Elected officials are accountable for the decisions they make, and a lack of knowledge of the act is not a defence for mal-administration of the law or public funds."

The troubled South West Shore Development Authority, which shut down last year, was recognized as the primary development agency for the towns of Shelburne, Clark's Harbour, Lockeport, Yarmouth, as well as the districts of Argyle, Barrington, Shelburne, Yarmouth and Clare.

Bishop has recommended that the outstanding loan guarantees to cover the line of credit not be paid from public funds.

Dexter won't provide bailout

Premier Darrell Dexter said the province will do what it can to help mitigate municipal losses, but won't provide a financial bailout.

"My understanding is that these municipalities have already made provisions with respect to this outstanding liability," Dexter said following the weekly cabinet meeting.

He said it is clear to him that the municipalities overstepped their authority when they approved the money, but the cabinet minister overseeing municipal matters at the time did not intervene.

The Progressive Conservatives — who were in power at the time — declined comment Thursday.

In a February 2010 ombudsman's report on the authority, Bishop said considerable concerns had been raised about its management and administration.

That study was prompted by complaints from local citizens regarding transparency in the expenditure of public money.