Vancouver approves 10.7% property tax hike to improve services

Vancouver City Council approves 10.7% property tax increase for improving basic services

Vancouver City Hall (Shutterstock)

A controversial average property tax hike of 10.7% was approved by Vancouver City Council on Tuesday night.

It was originally anticipated the final decision on the City of Vancouver’s 2023 operating budget and property tax increase would be made in a public meeting next week, but City Council was able to go through a shorter-than-expected public speakers list and debate proposed amendments before the end of last night’s meeting.

The 10.7% increase on the property tax, based on the assessed value of the property, is 1% higher than the 9.7% increase proposed by City staff last month.

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According to City staff, the approved property tax increase is estimated to result in average property tax increases of $124 for a condominium or strata unit (assessed at $759,000), $213 for overall residential properties (assessed at $1.3 million), $326 for a single-family home (assessed at $2 million), and $549 for a business property (assessed at $1.1 million).

With the property tax increase, the City of Vancouver’s operating budget in 2023 will increase to $1.97 billion — up from $1.75 billion in 2022, representing one of the largest year-over-year increases ever. This should not be confused with the separate capital budget for building new facilities and infrastructure, which was approved by City Council last year.

The elevated operating budget covers significant cost inflation in the economy, compensation increases for City staff for forthcoming collective agreements, additional funding to the Vancouver Police Department (VPD) including new additional police officers, the need to replenish the municipal government’s depleted emergency contingency fund reserve, and the acceleration of the replacement of aging infrastructure, especially sewers.

The decision by the ABC Vancouver-led City Council to go beyond the 9.7% and into the double digits is largely dedicated to improving the basic responsibilities and core services associated with the municipal level of government.

In addition to catching up on pandemic-related impacts and inflation, it was determined that for over the past decade, the municipal government has been significantly underinvesting in basic responsibilities and core services. It was suggested that previous City Councils made decisions to direct funding to non-basic responsibilities and non-core services that have since become structural parts of the municipal budget — a challenge to sever from City operations.

“One of the things I didn’t predict before I sat down on this chair was the size of the huge piles of crap that we would inherit. So here we are, eating crap sandwiches,” said ABC Councillor Brian Montague plainly during the meeting.

“The work now just begins to try deal with past Council decisions and previous Councils… 10.7% on the surface appears to be a difficult pill to swallow, but I think we’re making the right decision here.”

During the budget deliberations, the largest new additional expenditure added by ABC Vancouver through amendments was $4.2 million for 33 additional firefighters. Fire Rescue services have been severely strained by the volume of calls they receive to attend to incidents related to the worsening mental health and addictions crisis.

A further $3.6 million will go to the VPD, including $1.2 million for communications and evidence management technology, $450,000 for additional community policing, and $200,000 for a pilot program to have officers wear body-worn cameras, which was a specific election campaign promise.

Other added budget items include $1.8 million for snow clearing reallocated from reserve, $1 million for additional road maintenance, pothole repairs, and horticulture, $400,000 to fulfill the provincial government’s new requirements on accessibility including the hiring of a new language specialist, $186,000 for additional cleaning of public spaces, about $100,000 for Vancouver Public Library to hire one worker to provide staff training in crisis prevention and intervention, and $100,000 to enable City staff re-skilling to increase the number of positions.

“If I’ve learned anything from Vancouver residents and businesses that we met while door-knocking and during community engagements last summer and fall, it’s that the status quo was not an option. People have been frustrated by the perception that service levels have been slipping, as evidenced by litter, the buildup of graffiti, and the deprioritization of the maintenance of our streets and boulevard,” said ABC Councillor Mike Klassen.

“We’re going to fix the roof [of the City]. We’re going to bring back our budget levels to where important services that were slashed by previous Councils are restored.”

ABC Councillor Lisa Dominato said: “This may be characterized as a difficult budget, but the public wants to see value for money, and what you see in this budget is tangible things that are going to be addressed that haven’t been addressed over the number of years. There will be a tangible difference.”

Mayor Ken Sim said: “Vancouver is at a crossroads right now… We have a choice. Do we fix it or do we kick the can down the road, and let someone else deal with a way bigger problem? Looking at it in a different way, in essence, we’re dealing with the can that has been kicked down the road for far too long, and we’ve chosen to deal with the situation today, and we are going to fix that roof. I know if we are to lay the facts down to anyone, the prudent would make the same choices that we are making today.”

Sim added that significant property tax increases “cannot and will not become the norm,” and it was emphasized during the deliberations that ABC will continue to look for cost savings, identifying things the City shouldn’t be spending money on, efficiencies, and new revenue sources.

“We do not take this lightly. It is unprecedented, but Vancouver is not alone with other municipalities in the Lower Mainland and BC also seeing this. I know that doesn’t provide comfort with affordability issues, but I actually think we have the responsibility to be direct, clear, and straight up with the residents and businesses of Vancouver on what we’re actually facing, and that is absolutely the truth,” said ABC Councillor Sarah Kirby-Yung.

While the property tax impact on residents typically gets the most attention, businesses have also been hammered from all sides of cost pressures, with property taxes passed on to them by their landlords as part of their rent. Vancouver has historically had a hostile property tax environment for businesses, but it has improved over the decades by transitioning some of the property tax shares to residents.

In response to City Council’s decision, Bridgitte Anderson, the president and CEO of the Greater Vancouver Board of Trade, says the 10.7% property tax increase is “disheartening.”

“This increase comes at a time when many small and medium-sized businesses are struggling with increased costs, supply chain issues, and labour challenges,” said Anderson.

“Vancouver needs to make entrepreneurship easier and more attractive, rather than increasing what is already a disproportionate tax burden shouldered by businesses. Increases of this size are unsustainable for small and medium-sized businesses going forward.”

But Anderson welcomed the investments in basic responsibilities and core services to address public safety, revitalize downtown, and provide additional mental health supports, calling such investments “long overdue.”

It should be noted that City Council’s deliberations only determine the City of Vancouver portion of the property tax paid by residents and businesses. About half of the property tax goes to the City of Vancouver, while the other half is levied and decided by other regional and provincial authorities — TransLink, Metro Vancouver Regional District, BC Assessment, and the BC Municipal Finance Authority.

Sim stated last month these other regional and provincial authorities are looking to increase their portion of the property tax by 5% to 15% in 2023.

Over in the City of Surrey, the municipal government is considering an even higher property tax increase of 17.5% to account for inflation, deferred pandemic-time spending, and a potential reversal of the new municipal police force to keep the existing Surrey RCMP.

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