Mayor's Update: 2021 Budget Edition

Mar 5, 2021

Hello everyone,

The District’s 2021 Proposed Budget has been open for public input since January 26th, and Council will hear staff’s recommendations this coming Monday, at the March 8th Council Meeting. As we consider the proposed budget, I frequently get asked the question, “Why is the proposed budget increase higher than the rate of inflation?”

In fact, that’s the most frequently asked question every year, but this year, COVID-19 has brought nuances to the public debate. So, I’d like to address that question, along with a few others that are top of mind for our residents, including the impacts of the pandemic on the District’s finances, and our plan for moving forward to recovery.

First, what’s in the budget for 2021?

The proposal that’s coming before Council on March 8th includes:

  • a proposed operational tax increase of 1.48%; and
  • an Asset Levy of 2.5%

…for a total increase of 3.98%.

Background

This year’s budget is really a continuation of last year’s COVID-19 budget. Last March, I wrote to you about the first proposed budget, which recommended an operational increase of 3.95%, for a total of 5.45% once the asset levy was added. Then, the pandemic hit and staff prepared a completely different budget that reflected the realities of the situation.

With staff layoffs, a significant loss of revenue, and economic uncertainty, the second budget of 2020 was dramatically pared back. It included a 2% operational tax increase, a transfer of funds from capital to operations to address the revenue shortfall, and no asset levy.

A third budget was prepared in September 2020 to make adjustments based on a limited resumption of services.

Impacts of COVID-19

The COVID-19 response described above resulted in a reduced asset management fund, and many important and worthwhile projects were put on hold.

Other North Shore municipalities have had asset levies in place for 15 years or more, but West Vancouver only began building an asset management fund five years ago, so this represented a significant setback for us. This is why the 2021 Asset Levy was originally proposed at 3%. However, based on feedback received from the public, staff have recommended reducing it to 2.5%.

At the same time, staff went through the operations budget line-by-line and challenged every single expense. The District was required to invest in technology, and staff took advantage of that to create entirely new processes for service delivery. This work essentially constituted a core services review, and the resulting $750,000 in savings that was identified is reflected in the 2021 operational budget.

Understanding inflation

I’ve heard from residents that the District should keep budget increases to the rate of inflation, which they cite at 0.8% over last year. The District’s operational costs are mostly tied to wages and energy costs, while capital works are tied to the cost of construction.

In British Columbia, the inflation rate for the average hourly wage has been approximately 2.5% over the past decade, which is consistent with the District’s experience.

Inflation rates for construction costs in the Metro Vancouver region continue to exceed those for the rest of the country, ranging from 4% to 6% over recent years.

On the North Shore, these costs are even higher due to the challenges of transporting materials and labour to our relatively remote location, with unpredictable traffic levels.

I’ve also heard it asserted that the District continues to increase taxes at three times the rate of inflation. While Council is very sensitive to the cumulative impact of various taxation bodies, our actual operational tax increases for the past 13 years have averaged 1.69%; and over the past 10 years, 1.55%:

  • 2021 (proposed): 1.48%
  • 2020 – 2.00%
  • 2019 – 2.19%
  • 2018 – 2.09%
  • 2017 – 2.00%
  • 2016 – 1.62%
  • 2015 –.1.62%
  • 2014 – 2.92%
  • 2013 – 0.00%
  • 2012 – 0.00%
  • 2011 – 1.10%
  • 2010 – 0.00%
  • 2009 – 2.95%
  • 2008 – 3.50%

Further, unfortunately in the 3 years noted above with 0% property tax increases, because operating costs continued to increase with inflation, funds were taken from the capital budget to cover the shortfall, and affected assets weren’t repaired or maintained, and continued to deteriorate. This approach explains why the former police station and waterfront park washrooms fell into disrepair, to give just a couple of examples.

Proposed new staff

We are fortunate to have dedicated professional staff who serve our community well. Some in our community feel staffing levels should be reduced, and certainly not increased. However, running a municipality is much more complex than it used to be, and without our staff, we would not be able to continue to provide the excellent services and amenities we do now.

One question I hear with regards to staffing levels is, “Why would we consider adding staff when West Vancouver’s population is shrinking?”. The answer is that the cost of running the municipality is not related to the size of our population.

The roads, facilities, and staff are all needed to keep the community running whether there are many, or few people living in the houses. In fact, West Vancouver is a unique community and much of what makes it a desirable place to live also contributes to higher costs per capita than other municipalities.

I wrote about this last year, and you can learn more about cost drivers in this article.

This year, in order to maintain the District’s core services, and accomplish Council’s Strategic Priorities, staff are recommending the addition of 13 new permanent positions. Five of these positions are revenue-neutral, which means they will generate savings or revenues to offset their salaries.

COVID-19 Restart Grant

I’ve been asked why we don’t use the $5 million, one-time, Provincial COVID-19 Safe Restart Grant to off-set the property tax increase or pay back the asset fund.

We are extremely fortunate and grateful for this rare financial injection, but it comes with conditions.

It can not be used to lower the tax rate or fund capital projects, with the exception of technology. It is intended to help us re-start projects and initiatives that lost funding as a result of our pandemic response.

With these funds, we will be able to resume important core services and Council’s Strategic Plan initiatives without an additional tax burden. This is an important step in our community’s recovery.

Comparison to other municipalities

And finally, I often hear residents compare our finances to other municipalities. While this is not as straight forward as it appears because of each municipality’s unique circumstances, it bears highlighting total property tax increases of some of those in the region:

  • Port Coquitlam – 2.39%
  • Delta – 2.90%
  • Surrey – 2.90%
  • District of North Vancouver – 3.00%
  • Maple Ridge – 3.60%
  • City of North Vancouver – 3.98%
  • White Rock – 4.28%
  • Pitt Meadows – 4.42%
  • City of Langley – 4.68%
  • New Westminster – 4.90%
  • Vancouver – 5.00%
  • Richmond – 5.68%
  • Bowen Island – 6.6%
  • Lions Bay – 13.00%

Find out more

The details on the proposed budget are available at westvancouverITE.ca/budget. There is a wealth of information posted there, as well as public questions and answers.

While we haven’t quite put the pandemic behind us, I am confident that with the extraordinary measures that staff have taken in the past year, and in supporting this proposed budget, we can ensure West Vancouver recovers and moves forward in 2021, and thrives into the future.

Warm regards,

Mayor Mary-Ann Booth



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