Councillor Sarah Kirby-Yung: Higher taxes will continue to sting without a rethink by Council.
Mercifully, 2020 is drawing to a close. It’s been a tough year, marked by the pandemic that overtook our lives, put small businesses into survival mode, shuttered the tourism, arts and culture sectors, and left many with reduced incomes or lost jobs.
In the midst of this, discussions about the City of Vancouver’s 2021 budget got underway with calls to recognize the challenges faced by residents and small business echoing more loudly.
Until this new Council took office, Vancouver’s property tax increases averaged approximately 3% from 2010 to 2018. In this Council’s first operating budget for 2019, residential property taxes increased 6.05%, and in 2020 by 7.69% — far higher than inflationary costs.
Due to a combination of public pushback and the pandemic, Council had to temper its revenue goals and committed to a maximum 5% property tax increase. And that’s what they dished out. But, that 5% increase was only achieved through a significant draw down on reserves of $34 million in 2020, and a further draw down of $57 million in 2021. In other words, not through curtailing spending in any significant way, or looking for efficiencies, or focusing on what was most important right now.
The Mayor and Councillors who voted for the 5% tax increase (I did not, nor did my NPA council colleagues) argue it’s only an extra $104 for the median strata unit in the City, only $146 for the median single-family home, or only $166 for the median business property. But to the restaurant struggling to keep their doors open for another month, or the resident who lost their job, or the person who may still have work but their salary isn’t going up – that must sound so tone deaf.
This latest tax increase doesn’t recognize that Vancouver is already one of the most expensive cities in the world, housing costs are significantly more, water and utilities are going up at even higher rates than property taxes, and even food costs are expected to rise 3-5% in 2021. Incomes are lower than other cities with similarly high housing costs, and those lower incomes aren’t keeping up with the increase in costs.
Instead of taking a prudent approach to manage spending and risk with the long recovery runway ahead, Council voted for an onerous 5% property tax increase, continuing a worrying trend towards ever-higher rates, and an even more unsustainable fiscal path ahead, given the depletion of the City’s Revenue Stabilization Reserve from Covid-19.
This will effectively leave the City’s reserve fund at an all-time low – and likely require even higher tax increases in the coming recovery years. Replenishing the $90 million taken from the reserve would require either an additional 2% tax hike every year for three years (or the equivalent service reductions), or an 1% additional tax each year for five years on top.
Despite the very real and tough challenges created by the pandemic to balance the budget, the strategy taken didn’t focus on what’s most important to residents and businesses right now, or defer some operating activities until recovery is underway. The City’s own budget survey showed that top priorities for the people and businesses we serve included core service delivery, housing, homelessness and housing affordability, and small business and economic recovery. This budget lacks a strategy and focus needed to guide the City’s actions to support a successful post-COVID recovery. Instead, the 2021 budget is based on an across-the-board modest 1% reductions in all areas.
Right now, the path to recovery is to laser-focus City resources and spending. These are tough times; people and small businesses are just trying to make ends meet.
Vancouverites should know the budget presented by staff for a 5% tax increase did not include key directives passed by Council. These included extension of the lifesaving temporary extended patio program for restaurants, the new external Auditor General to bring fiscal transparency to the City, or much-needed increases in street cleaning and sanitation despite growing demand and calls for service over the past several years.
Supporting these was only achieved by using a further $8 million (rather than transferring it to shore up the depleted reserves), and reallocating money gained from holding the Vancouver Police Department budget at 2020 levels.
These priorities were passed by Council well ahead of the budget preparation process…but didn’t make it into the budget. But, for example, $1.5 million to study and implement mobility pricing in Vancouver’s “core” passed by Council after the draft budget was prepared, somehow was included in the baseline 5% tax increase.
Bottom line, the approach to the 2021 budget was out of whack with reality and what Vancouverites told us they wanted. It makes life more unaffordable for renters, homeowners, and businesses alike. We can only reach so far into people’s wallets.
A non-politico who finds herself in politics, Sarah Kirby-Yung is a first-time Vancouver City Councillor and former Vancouver Park Board Chair and Commissioner.
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