Property tax hike of up to 12% needed to balance City of Vancouver's 2021 budget

Nov 1 2020, 3:59 am

Vancouver City Council is facing some difficult choices ahead with the municipal government’s budget for 2021, based on a presentation city staff will be providing in a meeting on November 4.

Due to COVID-19’s continuing impact, revenues from programs and services, parking, license, and development will still be lower, yet there will also be rising costs related to the pandemic response, such as managing street disorder, homelessness, and the opioid crisis, as well as increased street cleaning.

A full year of operating costs in 2021 is anticipated from restarted programs and reopened facilities that were previously closed, including community and recreational facilities, and public libraries.

The city also considers initiatives and programs under “equity” and climate change action to be essential to the budget.

This past spring, the provincial government provided municipal governments across BC with the legal ability to run deficits in 2020 to help them manage their revenue shortfalls and maintain essential services. However, given that continued deficits are unsustainable, cities will be required to balance their budgets by the end of 2021.

Several possible budget and taxation scenarios, with the potential tradeoffs, have been drafted for city council’s consideration.

A 12% property tax hike would be necessary in 2021 to balance the budget, but only if the city does not draw up to $57 million from reserves.

City staff have indicated they are generally reluctant to depend on reserves, which are deemed as a one-time funding source, and a balance needs to be maintained to respond to future emergencies, such as snowfall response and the evolving nature of the pandemic. Over time, the reserve balances also need to be replenished.

But up to $8 million from the recalibrated capital plan — achieved by deferring construction projects and scopes — can be reallocated to the operational budget.

The base scenario of a 5% property tax hike incorporates the full savings from the capital plan recalibration, which could be used for recently approved city council initiatives, and reduce the tax increase or reserve transfer. Staff vacancies of 1% to 1.8% from the 2020 cuts would continue.

The 4.3% property tax increase scenario is made possible by redirecting nearly all of the capital plan recalibration savings to reduce the hike by 0.7% from the base scenario.

A 3% property tax increase scenario was also drafted, but city staff are not recommending this option as it targets major layoffs to frontline staff. This includes reducing 106 officers with the Vancouver Police Department, laying off of 25 firefighters, cutting back on 20 full-time staff in the Park Board, reducing hours or closing two small branch public libraries affecting 19 full-time staff, and reducing the allocated staffing time to the Engineering department to conduct infrastructure maintenance. Non-frontline staff were not listed for workforce cuts.

Further details on next year’s draft budget will be presented to city council in early December.

All of this is in addition to the 7.7% property tax hike that went ahead in 2020, which was the highest property tax increase in at least a decade.

Kenneth ChanKenneth Chan

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