The pandemic’s hit on city revenues, which could reach $190 million or more by year’s end, has councillors strategizing on how best to soften what will be a devastating blow to the city’s books and employees.
Green Party Coun. Adriane Carr, the longest serving member on council, said the decrease in city revenues combined with the closure of more than 15,000 businesses has made for sleepless nights.
“These are really tough times and there’s very onerous decisions that have to be made, and that keeps me awake at night,” Carr said Monday.
The reduction in revenues is a result of the city recently suspending parking enforcement and closing libraries, community centres, theatres, ice rinks, pools and cancelling programs. Employees connected to those jobs and facilities comprise the largest number of the 1,500 workers laid off over the last month.
Government-ordered physical distancing measures to help prevent the spread of COVID-19 are responsible for the shuttering of businesses and facilities.
'Crisis of our lifetime'
NPA Coun. Sarah Kirby-Yung described the pandemic’s hit on Vancouver as “the crisis of our lifetime,” both to the health of citizens and the economy.
“If your businesses are losing revenue and your residents are losing income, it’s unrealistic to expect that the city doesn’t need to reduce,” Kirby-Yung said.
NPA Coun. Colleen Hardwick echoed the sentiments of her colleagues, but emphasized she has unsuccessfully requested in the city’s two previous budget cycles for a detailed examination of city spending.
“If I had any control over this — which I don’t feel I do — I would be looking at the things we have to have, versus would-be-nice-to-have,” Hardwick said. “That is ultimately what we have to be doing.”
The concerns voiced by the three councillors come as Mayor Kennedy Stewart is suggesting the city is headed for insolvency.
The mayor based that conclusion on an online survey his office commissioned of 421 citizens that revealed 46 per cent of respondents have either lost their jobs, or had their hours reduced at work.
Thirty-two per cent could not pay their full mortgage in March, while 30 per cent of renters failed to pay their full rent, according to Research Co., which conducted the survey between April 9 and 10.
Come May, only 55 per cent of homeowners said they could afford to pay their full mortgage. For renters, it’s 63 per cent able to pay full rent.
Sell off city property
In an interview Monday, Stewart focused on the 25 per cent of respondents who said they will only pay half of their 2020 property tax bills, while six per cent can’t afford to pay any amount.
“That’s another $300 million hit, which if this [pandemic] lasts to December, is a half a billion dollars,” he said, noting a staff report released last week already suggested a revenue loss of $190 million by year’s end.
The mayor’s math is based on staff’s conclusion that every 10 per cent increase in the number of people who don’t pay their taxes results in a $130 million decrease in property tax and utility payments received.
The city has a variety of cash reserves, but many are legally restricted in what they can be used for, including the empty homes tax, and cannot be redirected to fund the budget.
The city has a “general revenue stabilization reserve” worth about $130 million, but staff has recommended only $35 million be used, if necessary.
“So we actually don’t have a lot of liquidity in terms of cash, and after we burn through our reserves, we would have to sell assets and most of that would be property,” said the mayor, emphasizing his call for a $200 million injection of cash from the provincial government.
Municipal Affairs Minister Selina Robinson told Glacier Media last week in an emailed statement that she is aware of the financial state of B.C. municipalities, and is working to develop solutions. More detail is expected in the coming weeks, Robinson said.
Carr said she didn’t want to discuss where cuts could be made until council develops a working group that can rely on the expertise of economists and listen to arts leaders, neighbourhood associations and other groups and citizens.
“We have not entered into that discussion at all yet,” she said.
While Carr supports the mayor’s request for $200 million from the provincial government, Hardwick and Kirby-Yung say the approach is not sustainable.
Hardwick, a vocal critic of the city’s escalating budgets and hiring of new staff, said any review of the budget has to first look at the number of staff working on capital projects.
'Hope and a prayer and a Hail Mary'
She pointed to the $18 million Vancouver Plan and the $30 million Granville Bridge connector as examples for cuts or delays, along with getting answers on why the city hired 1,119 new staff since 2016.
“I’m being told that it’s staff that’s going to determine where cuts are happening, but as someone elected by the people and to represent them in the city, I feel a responsibility to be setting those priorities and making those decisions, and not just delegating to staff,” Hardwick said.
Kirby-Yung described the mayor’s request for $200 million as a “hope and a prayer and Hail Mary.” She said senior governments already have enough demands on them in helping citizens with financial losses.
“The city needs to make some tough decisions in these tough times, and have a plan,” she said, noting she will request staff at Tuesday’s council meeting develop a cost-cutting plan that still allows council to balance its budget.
As Glacier Media reported last week, city staff has recommended a series of measures to keep the city financially afloat and bring some relief to taxpayers.
Those measures, which will be discussed Tuesday, include:
• Deferring the property tax due date for citizens from July to September
• Requesting the provincial government delay until September the city’s collection of taxes for school, transit and other regional fees.
• Deciding whether to follow the regional mayors’ lead in their call to have the B.C. government expand the existing provincial property tax deferment program to support property owners facing financial hardship.
The debate around these measures comes less than four months after council approved a seven per cent increase to balance a $1.6 billion operating budget and $502 million capital budget for new projects this year.
Of that seven per cent, the bulk — 3.4 per cent — was to cover increased fixed costs such as wages, rent and insurance. Another 1.7 per cent went to adding more police and firefighters, as well as improving building permit process and addressing compliance-related items involving health and safety.
The remaining 1.9 per cent, which is expected to generate the most debate at council, includes funding for arts and culture, affordable and social housing and fighting climate change.
The council meeting begins at 9:30 a.m. and will be livestreamed on the city’s website.
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