City of Vancouver recorded $229 million budget surplus in 2020

Vancouver City Hall (Shutterstock)

Although the leadership of the City of Vancouver painted a dire picture for the municipal government’s finances last year during the peak of the COVID-19 pandemic, the actual financial results for 2020 were much better than anticipated.

Audited statements released today show an annual consolidated surplus of $229 million, exceeding the budgeted surplus of $168.7 million by $60.2 million.

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This surplus will be spent on future construction projects, including initiatives funded by the federal government, Empty Homes tax revenue, and developer contributions towards public benefits and amenities.

The municipal government received emergency operating funding of $16.4 million from the provincial government and a total of $6.8 million from both the federal and provincial governments to help cover increased operating costs for pandemic-related expenses.

Consolidated revenues of $1.9 billion in 2020 represent a decrease of $103.3 million over what was in the budget. This is a result of health safety closures of facilities and reduced demand from the economic and transportation slowdown.

This includes $85.9 million in reduced revenue as a result of the closure of community and recreational facilities, civic theatres, and the significant reduction in the PNE’s programming, a $38.5 million decrease in parking revenues, and a $21.6 million decrease in license and development fees.

Property tax revenues were $44.9 million higher than the budget due to an increase in revenues generated by the Empty Homes Tax. Overall, property tax revenue was $62 million higher than what was collected in 2019.

In response to the revenue losses, the municipal government’s consolidated expenses reached $1.6 billion — a reduction of $163.5 million than budgeted.

Reduced salary expenses such as delays in hiring, deferral of pay increases, and furloughs resulted in $37.3 million in lower costs than budgeted. The closure of community and recreational facilities saved $36.1 million.

Lower demand for water and landfill services resulted in $21.4 million in lower utility costs than budgeted. As well, delays in building retrofit, heritage, and other capital projects and salary expense mitigations led to $20.3 million in lower than budgeted planning and development costs.

Economic conditions have greatly improved since Spring 2020, but uncertainty persists with depressed economic activity and demand for services still persistent. The City states it will hold staffing and operating spending below 2020 budget levels along with the city council-approved reductions to the remainder of the 2019-2022 capital plan that funds construction projects and new initiatives.

Last fall, the city council cut back on the four-year capital plan as revenues from the development cost levy and community amenity contribution fees paid by developers were forecast to fall by about 25% — a drop of $236 million to $717 million. Infrastructural investments in transportation and utilities outlined in the capital plan totalled $2.9 billion, with $1.63 billion coming from developers.

Aside from a 5% increase in the property tax in 2021, the municipal government is also tapping onto new revenue sources, including the expected launch of mandatory residential street parking permits across the city starting as soon as late this year. This new parking revenue source could grow to up to $15 million annually in a few years, up from the current $1.2 million brought in by the existing parking permit locations.

The possible introduction of mobility pricing such as tolls within the Metro Core (downtown Vancouver and Central Broadway Corridor) could raise between $50 million and $80 million every year for the city starting towards the middle of the decade.

The city council is also in the process of forming an Auditor General’s office for the municipal government that is independent of city staff. This new department is expected to launch later this year.

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