Vancouver city council is expected to approve a $2.36-billion operating budget next week.
That budget will come with a property tax hike.
So far, it appears it will be 5.5 per cent, according to the city’s draft budget report that went before council Tuesday.
That same report pointed out what current and previous Vancouver municipal politicians — and others across the province and country — have said for decades: that there’s got to be a better way to fund budgets than rely heavily on taxpayers.
“Local governments and their representative organizations, the Federation of Canadian Municipalities (FCM) and Union of BC Municipalities (UBCM), have noted for over a decade that the current municipal funding model and the overreliance on property taxes are neither sustainable nor resilient,” the report said.
Currently, 57 per cent of the city’s operating budget revenues come from property taxes.
Since Mayor Ken Sim and his ABC majority were elected in 2022, taxes have gone up 10.7 per cent and 7.28 per cent. Under the previous Kennedy Stewart-led council, cumulative tax hikes totalled close to 30 per cent.
Current and previous councils have argued what the tax hike should be, but all have been consistent in saying Vancouver continues to take on issues that should be funded by senior governments.
Health care, child care, non-market housing, homelessness, the overdose crisis and climate change adaptation are some examples where city taxpayers are increasingly being called on to fund senior government responsibilities.
Downloading equals $250M
Memos from city manager Paul Mochrie to council in 2021 and 2022 looked at the issue of “downloading” from senior governments. Mochrie reported the annual estimated cost at $250 million in operating and capital costs.
Another $36.8 million was related to legislative and regulatory changes.
“Collectively, the impacts of downloading, combined with the municipal role in actively taking on responsibility for certain service delivery areas, has resulted in significant ongoing pressures on the city budget and property taxes,” the memo said.
“This creates challenges for councils who must make difficult choices between delivery of important services and increases to property tax to deliver those services, which as a regressive form of taxation can adversely impact residents and businesses.”
Mochrie said the findings pointed to an opportunity for improved collaboration with senior governments “to ensure that the delivery of services, as well as the policy and funding tools, are aligned across all levels of government to optimize how taxpayer dollars are used to address the increasingly complex challenges facing society.”
Mental health workers
Coun. Mike Klassen provided a recent example of how the city was directly picking up the costs to help support people in a mental health crisis. A campaign promise from ABC Vancouver initially committed to 100 mental health nurses.
Council then left Vancouver Coastal Health (VCH) to decide who best to hire, how many people should be hired and where each mental health worker should be placed.
In doing so, council committed to an annual $8-million grant to VCH, beginning with a start-up budget in 2023 of $2.8 million. VCH’s actual expenditure for 2023 was $617,836, leaving $2.1 million to be carried forward into 2024.
In February, VCH provided updated hiring projections and council approved a grant of $4.6 million for 2024, in addition to the 2023 unused funds. This provided a $6.85-million budget for 2024.
So far, 14 full-time workers have been hired for the mobile crisis de-escalation service and 10 others have bolstered the Vancouver Police Department’s Car 87/88 program.
Two psychiatric nurses were hired for the VPD’s operations centre and another nine people now form the Indigenous crisis response team.
“These dollars are ones that are being borne by property taxpayers that normally wouldn't be,” Klassen said.
“That is why the questions I usually ask in the [council] chamber and of Coastal Health is: Is the health minister looking at this? Is the province looking at this? And the answer always is, ‘Absolutely yes.’ Which is why I think that the door is open on that conversation.”
Coun. Rebecca Bligh is in Ottawa this week and raising the property tax issue with MPs and cabinet ministers in her capacity as the new president of the Federation of Canadian Municipalities.
Bligh emphasized the lobbying isn’t to influence a new tax regime that would fund municipalities — but to distribute existing senior government revenues more equitably with local and municipal governments.
'Core issue' for municipalities
At its 2023 annual conference, the FCM called on the federal government for a “new municipal growth framework” that would link municipal funding to national economic and population growth.
Municipalities are responsible for maintaining and delivering most of the infrastructure and services that support residents in their daily lives, including roads, water, public transit and essential community services.
But Canada’s population growth has meant municipalities forced to play catch-up with infrastructure, services and a variety of social issues traditionally funded by senior governments.
“This is a core issue for our membership from communities of all sizes, rural and urban, and the call for municipal finance reform is one that resonates and is a top priority for our entire membership right across the country,” said Bligh Tuesday, speaking from Ottawa.
“No matter what size of a community, municipal budgets can no longer fund the necessary services that residents rely on municipal and local governments to deliver on.”
Wab Kinew
Bligh said the lobbying from civic politicians is beginning to get traction.
She pointed to Manitoba Premier Wab Kinew’s commitment to negotiate with the federal government in the interest of municipalities, recognizing that the finance model is not working.
Bligh said municipal and local governments are the most fiscally responsible form of government, noting they cannot run deficits or borrow money for operating budgets. She added that municipalities typically get 10 cents of every tax dollar, but are responsible for 60 per cent of the infrastructure.
“We know that housing and public safety is a priority of every order of government right now, and those two pieces largely are the responsibility of municipalities,” Bligh said. “Municipalities are being challenged to deliver more, but we can't deliver more housing if we can't flush toilets.”
