Posts Tagged ‘Property Tax’

In the middle of an affordability crisis, Vancouver hiked property taxes sky high. Why?

Originally published in the Globe and Mail on January 30, 2020

One of the top issues in the recent federal election was affordability. Canadians across the country expressed concern about rising costs of living, from food to housing.

So how is it, in the face of an affordability crisis, that the city of Vancouver increased property taxes to the highest level in recent memory? The answer lies in a false urgency.

In time for Christmas break, our city council rushed a vote to approve its 2020 operating budget to the chagrin of many members of council, including myself. I said from the beginning of the budget process that the recommended property tax increase was too high, and I ultimately voted against the final 7-per-cent increase.

The councillors in our Non-Partisan Association (NPA) caucus put forward a pragmatic motion to have staff further review fixed costs, explore reducing department budgets by 5 per cent, and report back in the new year with a revised budget.

Disappointingly, this motion wasn’t supported by the council majority.

Lost on everyone, it seems, is the fact that the budget does not need to be approved until April in the following year. The provincial government operates with interim supply until the final budget is approved, often a few months after the start of the fiscal year. I think it is fair to say that the 2020 city budget was rammed through without proper due diligence.

So, where are your tax dollars going?

Well, 3.5 per cent of the property tax increase is represented by “fixed costs” – which includes expenditures such as rents, leases, insurance, utilities, and wages and benefits for pending collective agreements. However, we later learned that some of these line items involved discretionary spending and unfilled job vacancies that could have helped reduce the tax by more than one percentage point. I believe we could have found more savings in this area.

The proposed $110-million in increased spending also included funding proposals to address a range of service gaps and new initiatives, such as public safety, the Vancouver Plan and climate initiatives. There is no doubt councillors hold varying views on what should be highest priority among these initiatives and the myriad of existing city services.

And while we may disagree on priorities, there were surely more savings to be found. Asking staff to take a further look for them was a matter of exercising good governance and transparency.

The city of Vancouver faces increased costs just as businesses and homeowners do. However, as stewards of the public purse, we need to work harder to innovate and pursue partnerships to make efficient use of public funds. This is something that was absent from the conversation.

The city’s 2020 budget document stated that cost pressures will continue for the next 10 years, making it “difficult to balance the budget with a reasonable level of tax and fee increases.” The report also proposed to find future opportunities to “offset the city’s increased cost structure and continued cost pressures.”

We need to turn this on its head and challenge the cost structure and service delivery itself. The city’s own budget document tells us the current structure and path is not sustainable.

In 2015, the city of Vancouver financial outlook foreshadowed that increased costs related to first responders would put significant pressure on the city’s budget. “These cost increases would need to be offset by increased revenues through fees or property tax, or by reduced expenditures or staffing levels,” claimed the report by staff.

In the following year, the city’s financial outlook anticipated the “potential for a significant gap between the growth in expenses and the growth in revenues.”

In other words, the warning signs have been there for years.

Yet, since that time the number of full-time equivalents staff has increased by nearly 1,000. The previous council was repeatedly warned that costs were rising faster than inflation and that corrective measures such as process improvements, information technology transformation and review of service delivery models were necessary to address “higher costs of labour, facilities and operations.”

So, as someone who was elected to make sure our government finances are sustainable, I have to ask: Why are we failing to heed the warnings of staff for half a decade or more?

Canadians expect dependable and affordable government services without overburdening them with high taxes. Vancouver City Council has a duty to make that happen.