City of Vancouver proposes 7.6% property tax increase for 2024

Vancouver City Hall (Shutterstock)

Ahead of the critical Vancouver City Council meeting in early December on the municipal government’s finances, City of Vancouver staff have outlined a draft 2024 budget for discussion.

This includes an average property tax increase of 7.6% for the 2024 tax year, which is lower than the 10.7% hike for 2023, but still well above the historical average.

But it is lower than the previously suggested 9.5% increase in 2024 and the previously estimated annual average of 9% over the next five years to balance the budget largely from natural inflation, without any substantial new inputs in priorities.

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The draft 2024 budget states the average annual property tax increase between 2024 and 2028 is now expected to be lower – in the range of about 5% to 7%. This forecast is based on new revenue generation opportunities, service improvements, and partnership opportunities with the provincial and federal governments.

According to the municipal government, compared to 2023, the proposed 7.6% increase for 2024 will translate to a $100 increase for a median condominium home worth $804,000, $170 for a median overall residential unit worth $1.37 million, $263 for a median single-family home worth $2.12 million, and $478 for a median business property worth $1.27 million.

The City states that 50% of the property tax revenue increase will go to more funding for “all City services” and “risks regarding uncertain costs,” 37% will go to added funding for the Vancouver Police Department, and 13% will go to additional infrastructure renewal, which represents the continuation of a 1% property tax increase to fund Vancouver’s infrastructure renewal deficit, particularly for aging and under-sized sewers.

For the first time ever, the City of Vancouver’s annual operating budget will reach and exceed $2 billion, continuing a trend of significant year-over-year increases, except for 2020-21.

The 2024 operating budget will reach $2.15 billion – up by about $200 million from $1.96 billion in 2023, and up from $1.75 billion in 2022, and $1.6 billion in 2021. The City first crossed over the $1 billion operating budget line about 14 years ago.

Out of the $2.15 billion, 20% will go to the Vancouver Police Department, 9% will go to Vancouver Fire Rescue, 8% will go to the Vancouver Park Board, 22% will go to utilities, 6% will go to engineering public works, and 3% will go to the Vancouver Public Library.

Over the next five years, the City’s operating revenue and expenditures are forecast to go up by an average of 7% annually.

Earlier this year, Mayor Ken Sim vowed the historic double-digit property tax increase experienced in 2023 would not be repeated for future years, and he sought to explore new revenue generation opportunities to reduce the pressure on increasing property taxes.

As well, the mayor’s independent task force – comprised of experienced professionals working on a volunteer basis, separate from the work of City staff and the auditor general – is expected to release its findings and recommendations next week on how to improve the City’s efficiencies to slow down the pace of its budget creep.

“What we have done is we have the Mayor’s Budget Task Force, which is a collection of maybe 24 of the smartest financial minds in the country. And they are ripping through our financial statements in a good way. With no guardrails, we told them, ‘Look, surprise us,'” Sim said in an interview with Daily Hive Urbanized earlier this month.

“And so I will be as surprised as everyone else in the city when we finally get the report, and then we’re gonna have to deal with it. This task force will show us what things are actually running really well, so that validates what we’re doing, or it can show us there [are] a lot of areas of opportunity that we should focus on. So either way, it’s going to be a great answer, and it’s going to be incredibly transparent.”

The operating budget should not be confused for the separate capital budget, which supports the major construction of new community amenities, utilities, and other infrastructure.

The draft 2024 capital budget is pegged at $1.25 billion, based on the previously approved multi-year capital budget and the proposed addition of $368 million. Over half of the proposed $368 million increase will go towards utilities, streets, and public parks.

This capital budget will include specific funding for the construction of the new Marpole Community Centre, and the rehabilitation and seismic upgrades of Granville Street Bridge and Cambie Street Bridge.

Over the longer term, City staff state the municipality needs to adjust its strategy to “strike a balance between debt finacing and pay-as-you-go.”

“In developing the Capital Plan, a key constraining factor is the impact on the Operating Budget and property tax arising from debt servicing and pay-as-you-go funding to support the Capital Plan. Given the rapidly evolving economic and geopolitical landscape with persistently high inflation and rising interest rates, there is a risk in overextending the City’s fiscal capacity and putting further undue pressure on future budgets,” states the draft 2024 budget.

“The projected growth in net debt per capita reflects a thoughtful, gradual increase in capital investments to renew and upgrade the City’s infrastructure and amenities. The trajectory could change should future Councils choose to transition more capital programs and projects from debt financing to pay-as-you-go sooner. Lowering debt financing would achieve long-term interest savings but result in higher property tax and utility fees during transition years.”

This is a list of the City of Vancouver’s historical average property tax increases:

2023: 10.7%
2022: 6.35%
2021: 5.0%
2020: 7.0%
2019: 4.9%
2018: 4.2%
2017: 3.9%
2016: 2.3%
2015: 2.4%
2014: 1.9%
2013: 1.5%
2012: 2.8%
2011: 2.2%
2010: 2.3%

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