City of Vancouver staff propose 5% property tax hike in 2023

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The property tax within the City of Vancouver could increase by 5% in 2023, based on what City staff have outlined in next year’s draft operating budget.

But this proposed rate hike could change, given that the new makeup of Vancouver City Council — led by the governing supermajority control of the ABC party — has yet to fully weave in its policies and priorities into the budget.

City Council will have its first opportunity to weigh in on the budget next week, but the final budget for City Council’s approval will not be finalized until March 2023. Typically, annual budgets are finalized by the end of the previous year, but the timeline was shifted due to the recent civic election. Public consultation on the budget will take place in January 2023.

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Earlier this week, as its most significant move affecting the budget to date, the ABC-led City Council directed City staff to set aside up to $16 million in 2023 to hire 100 additional Vancouver Police Department (VPD) officers and 100 Vancouver Coastal Health nurses as part of the party’s promise for a new comprehensive public safety strategy. On top of this, VPD has also requested additional funding to hire 20 more supporting civilian staff.

City staff’s proposed 5% hike is based on 1% towards additional infrastructural renewal costs, 2% for increased funding across City services and risks on uncertain costs, and 2% for the increased funding requested by the VPD, including the reinstatement of the VPD’s 2021 budget increase of $5.7 million following its successful appeal to the provincial government.

Public safety costs — both the VPD and Vancouver Fire Rescues combined — account for 29% of total public safety operating costs in the draft 2023 budget.

Overall, the municipal portion of the property tax funds about 58% of the City’s operating budget. This does not include the added layers of property taxes from Metro Vancouver Regional District (MVRD), TransLink, the provincial government’s school tax, BC Assessment, and the Municipal Finance Authority.

The draft 2023 budget notes utility fees are estimated to increase by 7.9% due to mandatory water and sewer infrastructure renewal and costs directly passed to the municipal government by MVRD.

If the 5% hike for 2023 holds, it would be lower than the 6.35% hike for 2022, which was higher than the 5% originally proposed. In April 2022, the previous City Council approved a motion requesting City staff to limit the 2023 property tax increase to no more than 5%.

Contrast this with Vancouver’s recent property tax increases of 2.3% in 2016, 3.9% in 2017, 4.2% in 2018, 4.9% in 2019, and 7% in 2020, along with various utility fee increases.

The draft 2023 budget increases the municipal government’s operating budget by 9.5% compared to 2022 — an increase of $166 million to $1.914 billion.

Over the next five years, the annual operating budget will grow by $550 million — rising to $2.039 billion in 2024, $2.176 billion in 2025, $2.319 billion in 2026, and $2.463 billion in 2027. City staff’s draft budget suggests the increases are largely fixed, structural costs — a natural increase of existing expenditures, without introducing major new policies and priorities.

In order to support the escalating operating budget, an average annual 7% property tax increase is needed between 2023 and 2027, according to City staff. Currently, the municipal portion of the property tax funds 58% of the City’s operating budget.

For the first time ever, revenue from the Empty Homes Tax was included in the operating budget, with the draft 2023 budget estimating $44 million from this single source.

The draft 2023 budget includes setting aside $152 million in operating costs for the Vancouver Park Board. The proposed budget was presented by Park Board staff this past Monday — but the ABC-led Park Board commissioners delayed making any further direction on implementation, effectively sending it back to the drawing board to allow the ABC super majority of commissioners to weave in their own policies and priorities. It should also be emphasized that City Council has the final authority on the Park Board’s budget.

As for the draft 2023 capital budget for construction and maintenance works, City staff is proposing to spend $1.31 billion, including $581 million for new capital projects and $730 million for existing capital costs.

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 across Metro Vancouver cities. (City of Vancouver)

vancouver property tax increase history 3

Average property tax increases for Vancouver residential property owners. (City of Vancouver)

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