A recent survey is showing alarming results and points to “a coming crisis” for the City of Vancouver’s finances, according to Mayor Kennedy Stewart.
The mayor recently shared the results of an online study conducted by the Research Co., surveying the economic impacts of the COVID-19 pandemic on Vancouver residents.
The survey said that half of Vancouver’s households are reporting an “overall decrease in income,” with 24% experiencing a significant decrease. Nearly half of respondents (46%) said that they had either lost their jobs or were given reduced hours.
The survey also showed that rent and mortgage payments were still a major issue and that many homeowners wouldn’t be able to pay for their upcoming property tax bills.
Only 68% of homeowners were able to make their full mortgage payment last month, and even fewer believe that they’ll be able to do the same in May. In contrast, 70% of renters said that they were able to make their full payment for April.
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When it comes to property tax payments, which are due in July, a quarter of respondents said that they would pay less than half of their bills. A few participants (6%) even said they planned on paying nothing at all.
Stewart says that he’s concerned for renters and homeowners and the heavy losses in revenue anticipated by the City.
“My heart goes out to those who have lost their jobs, or are experiencing a significant reduction in work due to COVID-19,” said Stewart. “I am especially concerned for those renters having trouble making their rent and homeowners who cannot make their full mortgage payments.”
He adds that without help from the provincial or federal government, Vancouver will need to take drastic measures to avoid insolvency.
“The research is clear — the City’s finances are going to be negatively affected by COVID-19 due to lost revenues and hard-hit homeowners defaulting on their property taxes,” he added.
By law, and unlike the provincial and federal levels, municipal governments cannot go into deficit or borrow money in order to balance its operating budget. The City of Vancouver is already anticipating losses of up to $189 million in revenue and fees.
Stewart says that if even a quarter of homeowners were to default on their property taxes, the City could lose an additional $325 million in revenue.
“Losing more than half-a-billion dollars in operating funds in 2020 would devastate the City’s financial position, forcing us to liquify assets and exhaust every reserve fund we have — just to avoid insolvency.”
Last week, the City of Vancouver called on the provincial government for a $200M emergency grant.
Stewart says that unless the City receives financial aid, they’ll be forced “to take drastic measures that will hurt residents and businesses,” as well as “significantly slow any post-pandemic economic recovery.”