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Vancouver’s budget continues to raises questions, protest

December 3rd, 2009 · 6 Comments

As I’ve mentioned in past blog p0sts, Vancouver’s budget process this year has been an exceptionally difficult one, not just because of the amount of money that is being trimmed, but because it seems to go far beyond what other municipalities are having to do as they also cope with the recession. My story in today’s Globe takes another look at what various groups are saying about the Vancouver budget.

I’ve seen lots of budgets in my day (adopting my old fogey voice here) but I’ve never seen one quite like this, where people from a wide range of political perspectives are questioning the strategy behind the budget process and the tax-increase limit that’s been arrived at. Since very few of us truly understand how to deconstruct a billion-dollar budget, we end up having to rely on statements from the various parties about what’s really going on.

Vision councillors say that the NPA council created a structural deficit that they’re now trying to fix, which means having to drastically rein in otherwise today’s four-per-cent increase will escalate exponentially in the next few years as it takes bigger and bigger increases to cover a pattern of spending far beyond inflation.

The NPA’s Suzanne Anton asks when Vision is going to stop blaming the NPA for everything and she fires back that the mayor and his team have loaded extra costs onto the city because they’re trying to take on provincial issues like homelessness and mental health, which cost big bucks.

It’s not easy to figure out what’s what. Certainly, in past years, I’ve seen the city’s financial people warn councils that even though they’ve made it through this year with a five-per-cent or six-per-cent or four-per-cent increase, the projections for the next year bad and, unless there are some changes, the council will be looking at seven, eight, nine, 10.

But that dire prediction for the next year never seems to come about. Changes DO get made and the next year’s increase, while not necessarily at the rate of inflation, isn’t in the double digits.

Given that, then, I feel as though many of us watching having to decide who we’re going to trust: Vision, claiming that the NPA was steering the city’s financial ship for the rocks; or the NPA, claiming that it’s all political strategy and money spent on what should be provincial social programs. Neither is a completely believable analysis.

It would be great if we could get a few finance wizards commenting on all this, in the way that we get development experts dissecting some of the land-use issues.

BTW, public meetings on the budget start tonight and, with 50 speakers signed up so far, are expected to continue next week.

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  • MB

    One perspective that we need to keep in mind is that the taxpayers of Vancouver are bearing the largest responsibility of all cities for many regional services and assets.

    Vancouver’s overall budget works out to approximately $1,700 per capita, whereas the suburbs have budgets less then half that. At any given time a huge proportion of suburban residents enjoy services and benefits paid for mainly by Vancouver residents and businesses.

    Vancouver has so far willingly accepted financial responsibility for managing regional assets like Stanley Park, two of the largest CBDs in the Metro area, and even hosting the fireworks and providing an alcoholic outlet on Granville Street for suburban drunks.

    Then you have the DTES. I suggest the cost of managing addiction should be borne more by senior governments under a revamped Health Care Act , not by the Vancouver Police Dept., because improvements to people’s lives there will stem from healthcare, not from criminalization.

    Maybe we need a Metro government with more clout to spread the burden out a little more fairly in the region.

  • spartikus

    where people from a wide range of political perspectives are questioning the strategy behind the budget process and the tax-increase limit that’s been arrived at.

    The restriction to 2% is not something I understand either, especially since polling indicates the public is willing to pay more to protect services. Is there something magical about that number?

    To play devil’s advocate to MB’s point, I think the counter-argument would be Stanley Park and events like the fireworks bring revenue in to Vancouver which is not shared, so it would only be “fair” for Vancouver to assume more of the costs.

  • PW

    As a card-carrying centrist I can’t be too troubled by most of what I can figure out about the budget, once I worked though all the bumpf and spin. It is nice to see some realism at City Hall, in contrast to the usual dreamy utopianism.

    There are reasons to be concerned about future revenue. The bumpf makes much of the decline in development revenue and I suspect some believe that will rebound soon. From my gloomy perspective, I would not be surprised if that revenue stays flat for a decade or so as the relationship between home prices and incomes painfully begins to return to the mean.

    I also noticed utility expenditures are going up 7.2% which eats up most of the 11.2% increase in utility fees, so little easy revenue there. I could not find any explanation for that increased expenditure or for the similar increase in capital spending, so I just assume these are estimated costs for long planned and necessary projects.

    With the feds now having a structural deficit and the province likely in the same boat (at best), expectations cannot be high for much help from those sources.

    So how to fund the 4% increase in salaries, which is surprisingly prominent in the bump and contrasted with below 2% CPI, or growth of 3% at best. Perhaps they thought best to make the tough decisions early and reduce staffing now and hope things recover as we get closer to an election.

    A couple of other bits of unpleasant news that might be looming out there are the review of the Municipal Pension Plan coming up at the year end. Last time around there was a substantial surplus, but a couple of years of poor returns and some more conservative assumptions could change that. Just as the City’s net debt went up $200 million in 2008, not because the debt increased but because the value of Temporary Investments dropped by that much. Hopefully, that has mostly recovered by now along with financial markets, but it is not inconceivable a loss might have to be absorbed at some point.

    As for the 2% limit on property taxes, I can only wonder if someone who might be politically ambitious does not want to give up the political highground by raising taxes too much while capitalizing on the unpopularity of the HST.

  • D

    The costs and benefits of visitors to the ‘central city’ (eg Vancouver) is an interesting phenomenon. Sure, Vancouver has to pay for Stanley Park, but gets people coming in and eating out, shopping, and otherwise spending money downtown. However, the incremental benefit of all of that consumer activity mostly flows to the province and the feds, in the form of sales taxes. Unless Stanley Park’s popularity as a visitor amenity boosts property values, the City doesn’t see much fiscal benefit. Obviously as a local amenity (for nearby residents, business owners) it does boost property values, but that’s aside from its pull on visitors from outside of Vancouver.

    During last season’s hockey playoffs there was a great comment somewhere (maybe here or on CityCaucus?) to the effect that for the City of Vancouver, the Canucks advancing is a negative, due to increased policing costs, while for the Province, it’s a positive. The property value of a pub isn’t much affected by the success of the Canucks, but the sales sure are…

  • Mike

    Last time I checked, City of Vancouver residents were paying for the downtown library in a lop-sided arrangement wherein regional citizens could use the libraries of the region but pay only for those in their own municipality. Obviously, more regional citizens use Vancouver’s libraries than the other ’round. Time to stop this: the GVRD should be contributing to the bill for Vancouver’s libraries.

  • MB

    WRT to VPL, only Vancouver residents can get a library card at Vancouver branches.

    WRT business revenue versus city revenue, our cuts to amenities and services are resulting from a drop in tax revenue primarily from new development irrespective of the tourist draw from Stanley Park and the fireworks, and the cost of providing and servicing the largest central business districts in the province.