Vancouver city finances in solid shape thanks to careful, transparent budget process
With council poised to approve a 2.3 percent tax increase next week, it’s worth remembering that Vancouver’s budget process, which has recently come under scrutiny by think tanks and business columnists, meets or exceeds the best standards in the country.
As a result, Vancouver has maintained a top credit rating during the past few years, despite the challenges of retiring the debts incurred during Olympic preparations, including the Olympic Village.
Vancouver’s “debt per capita,” which rose before the Olympics, has now peaked and is beginning to decline. Thanks to careful management, it never approached levels that should cause concern, but now it’s improving.
To ease the anxieties of Vancouver Sun columnists on these and other points, I submitted the following column to the Sun, where it was printed Thursday:
As Vancouver city council heads for a final decision on its 2016 budget and next year’s tax increase — expected to be 2.3 per cent — Vancouver Sun columnists have been sounding warnings about the need for tight spending, budget transparency and careful forecasting.
Our new budget has anticipated those concerns and then some. It provides additional funding to reduce permit and licence waiting times and clean up our streets while maintaining a priority on housing affordability and greening our city.
Business writer Don Cayo frets that Vancouver’s solid financial performance and careful budget reporting are “just a blip,” while Barbara Yaffe, citing the Canadian Federation of Independent Business, gripes that businesses are “growing increasingly dissatisfied with the municipal services they receive for the taxes they pay.”
But taxpayers can rest assured that the city’s budget process provides, in the words of a major credit rating agency, “transparent, easy-to-access disclosure to pertinent information and prepares detailed operating and capital budgets.”
Virtually all of the “best practices” proposed in the C.D. Howe Institute report Cayo reported on have been Vancouver policy for some time, some for more than 10 years. Since 2001, Vancouver has accounted for revenue and expenses on a gross basis and budgeted that way in the past several years. Budgets are set on an accrual basis, with the exception of capital assets, to allow citizens greater clarity on capital spending and debt funding of capital assets.
That kind of careful budgeting has enabled us to keep our tax increases at the mid to low end of the range for Metro municipalities, with an average tax increase of two per cent a year over the past five years.
No doubt businesses would like to see even better performance, but Metro Vancouver is expected to lead the nation in economic growth for 2016-2019 according to the Conference Board of Canada. The taxes we raise are supporting the services they need to sustain that growth.
The city of Vancouver plays a leading role in enabling a thriving business environment and a sustainable, world-class community in a fiscally responsible manner. We have already received one of the strongest credit ratings for a Canadian city (AAA/AA+).
During the last 10 years, Vancouver has reduced the business property tax share from 52 per cent to 43 per cent, and lowered the business to residential tax rate ratio from six to four; one of the most substantial improvements among major Metro Vancouver municipalities. A recently released report by the C.D. Howe Institute highlighted that Vancouver has one of the lowest business property tax rates in Canada.
While city expenditures have increased more than inflation, some of these services are entirely self-funded and not subsidized by property tax, and those increases reflect higher usage or new enhanced services that the public chooses to use.
Our five-year average property tax increase has been the second lowest among major Metro Vancouver cities. In the 2016 budget, we continue to align our property tax increase with forecast inflation of 2.3 per cent.
We strive to keep our property tax competitive while sustaining the core services that are highly valued by the community. At the same time, our significant investments in affordable housing, child care, and social, recreational and cultural amenities help attract and retain talent to live and work in Vancouver, which enable the business sector to continue to thrive for years to come.
To ensure the city delivers good value for its taxpayers, we conduct annual service satisfaction surveys as part of the budget process. The most recent survey, completed in October, found an encouraging increase in the satisfaction among businesses: 54 per cent are satisfied with city services compared to 50 per cent in the 2014 and 2015 pre-budget surveys.
There have also been significant improvements in business perceptions of the stability and enhancement of city services (74 per cent better or same) over 2014 and 2015 (66 per cent better or same). Results are presented in greater detail at Vancouver.ca/budget
With regards to fiscal accountability and transparency, over the past couple of years, we have integrated best practices in public sector budgeting that were recommended by PricewaterhouseCoopers when it was engaged in 2012. A recently released report by C.D. Howe recently rated Vancouver a B- grade, one of the highest in Canada for clarity of city budgets and financial reporting.
We are proud of what we have done, our strong credit ratings and the services we provide as a city. We’ll continue to work hard to improve our services and address the needs of the public.