Vancouver asks province for $200M emergency grant to mitigate financial disaster

The City of Vancouver is asking the province to step in with tax deferrals and an emergency $200-million grant to help city hall's grim financial outlook as it bleeds millions of dollars every week due to the COVID-19 crisis.

Mayor Kennedy Stewart said the city is losing $4-5 million every week as it spends money responding to the crisis while losing revenue at the same time.

"Our situation is extremely serious. We are facing a serious gap in funding at city hall — something we will not be able to make up in the near future," Stewart said Wednesday.

"We need help from the province."

While every type of organization faces challenges as the COVID-19 pandemic continues across the world, municipalities have a particular problem: On one hand, they're a government and expected to help citizens in times of crisis; on the other hand, municipalities in B.C. legally can't run deficits, putting most of them in a difficult position.

"There is no lifeline for local government," Stewart said.

Watch: Vancouver mayor projects deficits between $61 and $189 million for 2021 city budget.

Vancouver mayor projects deficits for 2021 city budget

5 years ago

Duration 1:48

With revenue streams evaporating amid the COVID-19 crisis, Mayor Kennedy Stewart presented three scenarios for the city's 2021 budget, with deficits between $61 and $189 million.

On Wednesday, B.C.'s premier responded to municipal requests for emergency funds saying that the province is working with the Union of B.C. Municipalities and with individual cities like Vancouver with its own charter to protect families and businesses.

"We haven't got a plan in place today, but it's obviously front and centre," said John Horgan.

He added that property taxes aren't due until July for most individuals and businesses and did not commit to deferring them.

"People need to understand that when they forego their taxes, they forego services as well."

Layoffs, service cuts to come without help: Stewart

Along with the one-time grant, Stewart called on the government for two other measures to help the city with its dire financial situation. 

First, the mayor asked the province to expand its provincial property tax deferment program to help homewoners who will otherwise default on their taxes due to the pandemic. The program currently provides low-interest loans to people who are elderly or living with a disability, while giving money to municipalities to make up for the deferred property taxes. 

Stewart said the program needs to include all residents, businesses and non-profit agencies struggling financially during the health crisis.

Second, the city urged the province to delay remittance of non-city property tax items collected by city hall until taxpayers receive the payments themselves. The items include provincial school taxes, TransLink fees and Metro Vancouver fees.

"We would not be asking for this if not for the dire financial situation we find ourselves in," Stewart said.

The city has already laid off 1,500 workers, and several other municipalities have taken smaller measures. Stewart said the city's finances will be decimated without provincial help, creating a drop in service for the public, more staff layoffs and impact on essential front-line services like the police and fire departments.

Stewart said the best-case scenario for the city's finances would see physical distancing measures lifted by May. In that case, the city would still have a $61-million budget deficit.

In the worst-case scenario, with physical distancing lifted in December, the mayor said the city would be out $189 million.

Provincial response coming

Maja Tait, mayor of Sooke and president of the Union of B.C. Municipalities, says the COVID-19 outbreak is affecting all sizes of municipality, with many already cutting budgets for the upcoming year.

"Many of us are choosing a path of being prudent because we appreciate the circumstances ... some things that obviously have been scheduled and planned for are not going to happen," she said. 

In normal circumstances, a municipal facing serious financial issues can work with the Municipal Finance Authority of British Columbia, which pools borrowing and investment needs.

In addition, most municipalities are in fairly good financial position, some with hundreds of millions of dollars in reserve — but the fact virtually every community is facing such a big revenue shortfall this year means Tait is looking for the province to step up.  

"I think it would help if they came forward with a framework that works for all of us, because how local governments are resourced is all very different," said Tait. 

In a statement, Minister of Municipal Affairs Selina Robinson hinted that the province would take action on helping municipalities "in the coming weeks."

"Our action plan's immediate focus was on relief for people, but I know COVID-19 is also causing significant financial challenges for municipalities, especially around property tax deadlines and collections," she said.

"We will ... look at how we can deploy provincial tools to help communities during the pandemic."

To spend, or cut?

While virtually every local politician will welcome provincial help, a bigger debate will come when councils have to decide how much they can assist with the economic recovery in their communities.

Several communities have reduced scheduled property tax increases for the next year — which currently must be paid in July — with Port Coquitlam going so far as to freeze property taxes completely.  

Stewart said he wasn't interested in lowering the scheduled property tax increase in Vancouver, and University of Victoria economics professor Rob Gillezeau believes that if the province provides financial flexibility for municipal governments, they should take it. 

"The last thing we want any level of government to do now is scale down," he said. 

"The last thing we want is additional people thrown out of work … once the public health situation is contained, we're still left with this quite deep economic recession, and I think that there is a good role that [municipalities] can play there."

Gillezeau said that could mean anything from new infrastructure projects to greater grants for non-profits, to targeted programs that could help new graduates facing a nearly non-existent job market. 

That debate will only come once B.C. moves from an emergency situation to a recovery. For now, mayors and councillors can only wait on higher levels of government providing them with the relief — and make backup plans if that doesn't happen. 

"I don't think people want to see political divides," said Kirby-Yung.

"We also are going to have reduced revenue and we're going have to make some tough decisions. So everybody is in the same boat and I think we need to pull together on that."

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