‘BLEEDING MONEY’
City seeks $200M in aid
Vancouver Mayor Kennedy Stewart is asking the province for a financial lifeline of up to $200 million to make up for fees, licences and fine payments the city is losing during the COVID-19 pandemic, the mayor said Wednesday.
The city is losing $4 million to $5 million a week, even with the savings from having parks, libraries and other civic facilities closed, and is absorbing additional costs from playing its part in the pandemic response, Stewart said.
“We are bleeding money right now and worried about property tax defaults by those who usually pay property tax,” Stewart said during a news conference on Wednesday where he talked about a range of dire possibilities, “so we have to be ready for this.”
Without provincial help, Stewart said the city will be faced with stark choices about cutting “front-line services,” which would mean layoffs in addition to the 1,500 temporary notices issued to employees of civic facilities such as libraries, recreation facilities and theatres closed due to public health orders.
Stewart unveiled a staff report that outlines dire possibilities for city finances on the same day that Port Coquitlam Mayor Brad West announced his council has rescinded the small tax increase it put into its 2020 budget, as all B.C. municipalities grapple with the financial implications of the COVID-19 response.
“We’re all finding ourselves in a time of incredible financial pressure,” said the Union of B.C. Municipalities president, Maja Tait. The mayor of the District of Sooke on Vancouver Island, Tait is canvassing the organization’s membership on their needs.
PROPERTY TAX DEFAULTS
How the pandemic hurts municipal revenue will vary by municipality, Tait said, but the big worry for all of them is the prospect of cash-strapped home and business owners defaulting on property taxes, since municipalities legally cannot run deficits.
“We know that, obviously, because we live in our communities, households and businesses are caught in a severe financial crunch and they’re hurting,” Tait said.
Tait said the UBCM is developing a “common understanding ” of the problems municipalities are having and are in weekly contact with the province about a possible response.
Municipal Affairs Minister Selina Robinson said in a statement that her department was working on a solution to support local governments. She was not made available for a followup interview.
“I know COVID-19 is also causing significant financial challenges for Vancouver and all municipalities,” Robinson said.
In Vancouver, the staff report that Stewart unveiled outlined three scenarios. In the most optimistic estimate where physical-distancing requirements begin to be lifted by the end of May, the city would face a net loss of $61 million in revenue, after accounting for savings of having facilities closed and a clampdown on discretionary spending.
The loss would be $111 million if facility shutdowns and physical distancing go on until the end of August and $189 million if the COVID-19 response lasts until Dec. 31. That is after savings of between $26 million and $36 million from closing facilities.
Non-tax revenues, for things such as recreation fees, facility rentals, licences and parking are expected to be down 50 per cent for the period between the beginning of March and the end of May with parking fees forecast to be the biggest hit, according to the city report.
The report estimates parking fees will be down 75 per cent, between $29 million and $51 million, depending on how long the shutdown lasts.
Park board revenue would be the next most vulnerable with losses estimated at between $21 million and $38 million, depending on when distancing requirements are lifted and how quickly economic recovery happens afterward.
Stewart said the cash infusion he is looking for would allow the city to maintain essential services and leave Vancouver better able to support the recovery phase.
“Or we could be financially decimated, unable to move quickly, leading to a much slower recovery,” Stewart said, and “an even slower economic recovery for the rest of British Columbia.”
However, city residents still need to be prepared for some tough decisions on what services the city will be able to provide after the pandemic, said Coun. Sarah Kirby-Yung.
Council still needs to discuss the staff report and recommendations at its meeting next week, and Kirby-Yung said the questions she has for the debate are related to when staff will have more information on what is being done to mitigate costs, such as deferring capital projects.
“We’re hopeful that the province would be able to step up and provide support,” Kirby-Yung said, “but we need to be prepared if they don’t.”
“I think you’ll have to look at, potentially, the cancellation of services that are not core,” Kirby-Yung said.
Core includes public safety — fire and police departments — water, sewer, sanitation and business-permit work that would contribute to economic recovery, Kirby-Yung said.
“Anything above and beyond that is potentially on the table for taking a pause while we’re in a COVID situation.”
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