Vancouver’s mayor says he’s seen city-led research that suggests up to 25 per cent of the city’s property owners may not be able to pay their property taxes in full or at all this year, adding further concern to the city’s financial outlook amid the novel coronavirus outbreak.
Kennedy Stewart said Sunday that if those deferrals come to pass, the city could lose up to $500 million from its operating budget, which would be “absolutely devastating.”
“If we lost half a billion dollars in revenue, we would have to really burn through all our stand-by cash we have, all our reserves, and we may even have to sell some city lands in order to meet all our obligations, so it’s a very serious situation,” he said.
“We’re in the middle of finalizing our property tax instalments for this year, and council has some very tough decisions to make going forward.”
Stewart’s comments come after a staff report unveiled last week that projects the city is losing between $4 million and $5 million a week in revenue.
The report, which will go before city council Tuesday, says the city’s 2020 revenue projections could be impacted by $60 million at best, and $190 million at worst, depending on when physical distancing measures are lifted— even if property taxes are paid in full.
The report says the revenue loss is due to the closures of civic facilities like community centres and theatres and the cancellation of community and recreation programs, which contribute 25 per cent of the city’s revenues along with parking fees and permits. Roughly 1,500 city staff have been laid off due to those closures and cancellations.
Staff say those revenues have dropped by 80 per cent overall, forcing the city to rely more on forthcoming property and utility tax payments, which make up the remaining 75 per cent of municipal earnings.
Yet the report says those revenues are now at risk too. With 15,000 businesses temporarily closed and others significantly curtailing their services in order to follow public health orders — restaurants and bars can only offer takeout and delivery, for example — staff fear they could see a “potentially higher delinquency in payments” of those taxes.
“While actions have been taken to mitigate the revenue impacts, much uncertainty remains and it is important to consider the potential for prolonged budget impacts,” the report says.
Stewart has already called on the province for a $200-million emergency grant to help offset the city’s losses, which the mayor said Sunday appears to have been denied.
The report suggests council ask the province for an expansion of the property tax deferral program to include anyone experiencing financial hardship during the COVID-19 crisis, including businesses and non-profits.
“We don’t get a share of the sales taxes, we don’t get a share of income taxes. Traditionally, municipalities operate on property tax revenue,” he said. “Without property tax revenue, we really can’t function.”
The city’s hands are further tied by provincial directives that municipalities cannot run deficits, Stewart said.
The mayor said the city research project found 50 per cent of residents are struggling to pay their bills, including mortgage and rent.
Property tax notices will still be going out to owners this month, but the staff report also suggests that council extend the payment deadline from July to September to help those owners raise the necessary funds.
While other cities have started liquidating their assets, Stewart said selling off city lands is a challenge as most of it is already spoken for, with desperately-needed housing projects in the works.
He said the province needs to provide more room for the city to adjust to the new financial reality the pandemic has created.
“I’m ringing the bell here and saying we are in difficulty,” he said. “The city has never faced a situation like this.
“My job as mayor is to inform the citizens the best I can and to be their champion when it comes to asking for help from the provincial and federal governments when it’s needed, and it is needed now.”
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