City of Vancouver proposes 9.7% property tax hike in 2023

Vancouver City Hall of the City of Vancouver. (Shutterstock)

With escalating costs due to rampant inflation, years of deferred spending, and a new Vancouver City Council looking to roll out its priorities, particularly in public safety, the City of Vancouver is in need of a significant infusion of additional revenue — and it is now turning to the highest property tax hike in many years as its tool.

City staff have proposed a 9.7% hike in the average property tax paid by residents and businesses in 2023.

This hike is nearly double the 5% increase proposed by City staff in November 2022, when the draft 2023 operating budget was reviewed for the first time, but in line with City staff’s November 2021 forecast when they predicted the need for a 10% increase in 2023.

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The substantial property tax rate increase this year funds much of the 2023 operating budget increase — up by 12.2% or $213 million from 2022 for a total 2023 operating budget of $1.96 billion. This should not be confused with the 2023-2026 capital budget of $3.5 billion on new construction to improve and expand facilities and infrastructure, which was approved by the previous City Council last summer.

According to City staff, high inflation that first began in early 2022 is expected to continue throughout 2023 and into 2024, with inflationary cost pressures not expected to moderate until 2025.

“The current environment of rising inflation has placed growing pressures and significant challenges on the City’s operational costs. Municipalities across Canada are also experiencing similar pressures and are implementing higher increases in property tax rates for 2023 than historical levels,” reads a City staff report.

The 2023 budget is also the first full year that reflects much-needed investments that were deferred due to the pandemic’s earlier hard-hit impact on the City finances. It accounts for higher-fixed cost estimates and incremental funding for the renewal and maintenance of infrastructure and public amenities, as well as increases in the regional utility fees of Metro Vancouver Regional District.

There is also a $28 million increase in the Vancouver Police Department’s (VPD) budget, bringing the total policing budget up to $398 million in 2023. This includes $8 million to implement City Council’s approved strategy of hiring 100 new additional police officers; $7.8 million for increases in fixed costs such as compensation, benefits, and vehicle fleet; $7.3 million in recruit training and restoring permanent funding as mandated by the provincial government following the VPD’s successful appeal of the 2021 budget cut; and $5.1 million for increases to third-party costs for the VPD’s non-emergency call services through E-Comm 911.

A portion of the property tax increase also goes towards replenishing the City’s General Stabilization Reserve Fund (GSRF), which is a contingency fund dedicated to unexpected operating costs arising from emergencies, such as inclement weather, catastrophic events, environmental hazards, extraordinary public safety situations, and economic downturns.

The GSRF was drained earlier in the pandemic to mitigate the City’s revenue shortfalls and for pandemic-time emergency spending relating to health safety measures. This fund can also be used for covering any additional snowfall removal costs beyond the normal budget allocation for such activities.

As of December 2022, the GSRF was sitting at a very unhealthy negative sum of $2.4 million — down from its healthy level in the positive territory of about $150 million in late 2019. The proposed 2023 budget sets aside $5.3 million to the GSRF to bring it into the positive territory of $2.9 million. With the property tax increase, the GSRF will further replenish by $9.5 million reaching $12.4 million. It is expected it will take a decade to fully replenish the GSRF to adequate levels.

Of the proposed 9.7% average property tax increase, 5% will go to increased City services costs, additional VPD officers, and covering cost escalation; 2.7% will go to the VPD’s successful permanent budget appeal; 1% will go to additional infrastructure renewal; and 1% for replenishing the GSRF.

Contrast this with Vancouver’s most recent average property tax increases of 6.35% in 2022, 5% in 2021, 7% in 2020, 4.9% in 2019, 4.2% in 2018, 3.9% in 2017, 2.3% in 2016, 2.4% in 2015, 1.9% in 2014, 1.5% in 2013, 2.8% in 2012, 2.2% in 2011, and 2.3% in 2010.

In order to maintain current City service levels against the headwinds of high inflation and growing cost pressures, City staff estimate the average property tax would have to increase by about 8.6% each year between 2023 and 2027. Over the same period, the City’s operating revenues and expenditures would go up by an average of 7% annually. In 2024, the City’s operating expenditures will reach and cross over the $2 billion mark for the very first time — 13 years after it reached and crossed the $1 billion mark.

City Council will review the proposed 2023 operating budget and property tax increase in a public meeting on February 28.

“Our team has inherited an empty reserve fund, a half billion dollar infrastructure deficit, and years of underfunding of services that matter to residents,” ABC councillor Sarah Kirby-Yung told Daily Hive Urbanized. “As we’ve begun to see with other municipalities around the region, there are significant pressures on city budgets including rising inflation and labour costs — Vancouver is not alone in facing these challenges.”

“The draft budget released yesterday by City staff is not final and Council is still considering it. Our goal is that the final budget will reflect investment in the services that residents overwhelmingly showed mattered to them with the mandate voters gave us.”

The City of Vancouver is certainly not alone in its high property tax hike; municipal governments across Metro Vancouver will finalize their 2023 operating budgets over the coming weeks, and at least the vast majority of the cities will almost certainly post much higher property tax increases than previous years.

Over this past long weekend, for example, the City of Surrey made public its proposed 17.5% property tax hike, including 9.5% for ending the transition to the municipal Surrey Police Services and retaining the existing Surrey RCMP, and 7% to cover cost inflation, and the hiring of additional police officers, firefighters, and bylaw officers.

metro vancouver property tax increase history

Average property tax increases across Metro Vancouver cities. (City of Vancouver)

vancouver property tax increase history 1

Average property tax increases across Metro Vancouver cities. (City of Vancouver)

vancouver property tax increase history 3

Average property tax increases across Metro Vancouver cities. (City of Vancouver)

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