Don Cayo
Sun
The bad news is that city hall’s portion of residential tax bills in Vancouver will likely go up eight per cent this year.
Worse, a plan put forward by city staff — almost certain to be the blueprint for what council decides next week — says spending would be a good deal higher if not for one-shot cuts. In other words, next year these cost-saving measures won’t be an option.
And — worst of all, though only for some city taxpayers — if you own one of the pricey properties that got a tax reprieve this year thanks to the provincial government’s tinkering with assessments, brace yourself for a double whammy in 2010. Because, while it’s the owners of less desirable properties who get stuck with extra costs this year, next year it’s your turn.
The residential tax increase will be about double the business tax increase. It’s so high for two reasons, one easily defensible, the other not so much.
The biggest factor, responsible for about three-quarters of the increase, is spending. To be fair, the current council did inherit a lot of this extra cost, particularly the sharply higher wages mandated by collective agreements signed by the previous council. But the two main cost-cutting options — a hiring freeze (with many exemptions) and the axing of a couple of programs favoured only by the NPA before it was voted out — still leave the spending total 5.74 per cent higher than the year before. An extra 0.09 per cent for new programs inches it up to 5.83 per cent.
The rest of the increase will come from an oft-promised shift of one per cent of total tax burden from business to residential. With each group paying roughly half the total, this means a two-per-cent saving for businesses and two per cent extra for residents. Unwelcome as this is, it’s hard to argue that it isn’t fair. Vancouver businesses have long been paying for far more than they consume in municipal services and a far larger share than businesses pay in other cities.
The spending increase of 5.83 per cent recommended in the report is down from a 6.29 per cent forecast in February. But the cost-cutting exercise conducted between then and now also had to contend with an unprecedented drop in revenue projections because development activity has declined so sharply.
Thus, to pare the tax increase by half a per cent and to make up for the declining revenue, staff had to find about $16.2 million in new revenue or spending cuts.
They found $1.3 million by proposing substantial hikes in parking fees, plus $1 million by shifting some costs from the operating budget to other accounts like capital and the Property Endowment Fund. And low fuel prices allow the pain-free saving of an extra $500,000.
The rest is from the hiring freeze, non-renewal of contracts and, of course, axing pet NPA projects like Downtown Ambassadors and Project Civil City.
The trouble is, you can’t put off hiring and contract work indefinitely if you are not also prepared to cut or dramatically downsize some activities. So if this spending is resumed in 2010, you can bet taxes will take off.
In fact, the report estimates spending will soar 4.7 to 8.5 per cent next year without any new undertakings. (And the residential tax burden will rise about two per cent more than that if, as promised, the business-to-residential shift is continued.)
What will make the picture much muddier is the second-year fallout from the B.C. government’s decision to meddle with property assessments this year.
I’ve been away from work for the last five weeks but, as I wrote before my departure, this move shifted a big chunk of this year’s tax burden from properties whose value was still rising to those whose value had stalled or was falling. It did this by setting the basis for 2009 tax bills on the lower of the last two assessments. Thus, those who would have had bills based on higher property values got a big break, and the extra tax they should have paid got dumped on those whose property values didn’t change or declined.
E-mail from readers during my absence made it clear that BC Assessments’ appeal process not only refused to consider the fairness of this, it also refused to hear appeals in cases where the second assessment was much higher than the first. It doesn’t matter if the second assessment is justified by market conditions, homeowners were told, your tax bills will be based on the earlier, lower assessment.
But this leaves those high assessments still on the books, and they’ll be the benchmark on which the next round of assessments is based. So if the assessed value of your property is already too high, you can expect this error to be included — if not compounded — in next year’s assessment.
Combined with the forecast big increase in spending, your tax bill’s headed through the roof.
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