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Vancouver mayor ‘gobsmacked’ at cut in COVID-19 funding amid budget crunch

Vancouver’s mayor says he's "gobsmacked" the city will get just one-quarter of what it was expecting in joint federal-provincial covid-19 recovery funding. Nadia Stewart has more reaction from the city and the explanation from the province. – Nov 5, 2020

Vancouver’s mayor says he’s “gobsmacked” the city will get just one quarter of what it was expecting in joint federal-provincial COVID-19 recovery funding.

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Kennedy Stewart said Wednesday the city was banking on a cash infusion of about $60 million. Instead, it will get $16 million.

Stewart said that’s far below what other municipalities are getting per capita, and that the province had committed to distributing the funding based on population.

Read more: ‘Trade offs’ required to keep Vancouver property tax hike under 12%: city report

“The province decided to renege on the federal agreement, Stewart said.

“(I’m voicing) my extreme displeasure at this decision… Getting $16 million gives us around a $45 million shortfall, which is the equivalent of a seven per cent tax increase — that’s how much we lost out.”

Trade offs needed to keep Vancouver property tax hike under 12% – Nov 1, 2020

It comes as Vancouver faces down a $57-million pandemic-driven shortfall in its 2021 budget. City staff have recommended taking the money from the city’s reserves, a one-time measure they called “unsustainable.”

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Without that money, the city would need to increase property taxes by as much as 12 per cent, but council has committed to keeping the hike to five per cent or lower.

READ MORE: Vancouver council approves quarter-billion dollar capital budget cut amid COVID-19

In a statement, the province said the funding formula provides more money to larger communities, but a higher per capita level of funding to smaller communities.

It said that’s because small cities often lack the means to generate tax based funds to restart operations.

City of Vancouver faces questions about expensive furniture and renovations – Sep 16, 2020

But Vancouver city councillor Pete Fry said B.C.’s big cities also lack the tools to raise funds.

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“That’s going to be a huge body blow to Vancouver, Surrey, Burnaby — all the big cities in British Columbia who were really counting on that money,” he said.

Andy Yan, director of Simon Fraser University’s City Program, said COVID-19 has underscored the challenges cities face delivering services with limited financing tools.

“(It’s) going to be one of the key challenges in the next couple of years, (cities) are going to be very, very strapped towards changes in terms of what kinds of incomes they can depend on, changes in terms of fees, and where cities can meet these shortfalls,” he said.

READ MORE: Vancouver mayor says 25% of city may be unable to pay property taxes due to COVID-19

In the short term, cities will face tough choices in terms of what can be deferred, what needs to be prioritized, and how much cities can realistically hike fees and taxes.

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“What are needs versus wants,” he said.

“There are limits, really, to what taxpayers are able to afford.”

But in the longer term, the provincial government and B.C.’s municipalities will need to come to terms with a new way of financing cities.

“We’re going to need that kind of municipal finance reform to really, I think, reboot our respective economies both at the muni level as well as on the provincial level.”

— With files from Emily Lazatin and Nadia Stewart

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