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2006 budget showing signs of strain

Mayor returns from Victoria disappointed - still hopeful for new financial tools
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Whistler Mayor Ken Melamed shows off the muni's new bylaw Smart car on Tuesday. Photo by Alison Taylor

The municipality is feeling the financial strain of unfulfilled Olympic promises from the province and several challenging years for the tourism industry.

For the first time ever Whistler’s hotel tax reserve will have a negative balance in 2006. The reserve is projected to be negative $2.1 million, giving council the difficult task of trying to find funds elsewhere in the budget to pay for projects and operations funded by the hotel tax. Alternatively, the projects won’t get done.

Whistler’s expenses from the hotel tax reserve are now far more than its revenues.

If the trend continues Whistler’s image, reputation, and ability to deliver a world class Games may be on the line.

Not only are hotel tax revenues down significantly due to challenging economic times, operating expenses and other claims on the hotel tax money, for Olympic events and increased resort marketing, have gone up significantly.

It was hoped that financial tools promised at the time of the Olympic bid would help offset scenarios such as this.

"Suffice it to say, we can’t maintain the situation for much longer," said Mayor Ken Melamed on Tuesday, one week after he was in Victoria hoping for a successful resolution to Whistler’s long sought after financial tools.

Whistler has been lobbying for a bigger share of the provincial hotel tax as a new financial tool. It was to be one of the community’s Olympic legacies, promised to Whistler by Premier Gordon Campbell.

But after years of lobbying and devising formulas to make the idea palatable to the province, there is still no resolution.

In Councillor Gord McKeever’s mind, push has finally come to shove.

"Up until now it’s been disappointing but we’ve had the (financial) wherewithal to compensate for the failure," said McKeever, the only member of the current council – save the mayor – who was on council last term and involved in earlier lobbying.

"(This year) is the first time that we will be really handicapped in our ability to do what we need to do by the failure of the delivery of these commitments. So the game has stepped up a notch this year. This is the first time I think we’re up against the challenge of those unfulfilled promises."

Melamed and eight other members of the Resort Community Collaborative, communities that are lobbying as a group for more financial tools, met with provincial ministers on Tuesday, March 28 but failed to get any concrete commitments.

The mayor also met with Premier Gordon Campbell the following day where he talked about Whistler’s outstanding Olympic legacies such as the boundary expansion, the athletes village business plan and the financial tools (see related story).

Councillor Nancy Wilhelm-Morden was at the meeting, along with Administrator Bill Barratt and Whistler’s Olympics point man Jim Godfrey.

Said Wilhelm-Morden: "The necessity for us to obtain a greater percentage of the hotel tax in order to deliver what we need to deliver to properly host the Games is the most serious issue we have on our plate right now."

And while the premier was positive and recognized that Whistler’s financial tools have long been outstanding, the Whistler delegation left empty-handed.

Still, there is a feeling of cautious optimism on council.

"The fact that they haven’t said ‘no’ is good news for us," said the mayor at Monday’s council meeting as he gave the community an update.

"They (the ministers) still had questions but the questions were less."

Specifically, the Resort Community Collaborative is lobbying the province for a bigger share of the provincial hotel tax. The province shares 2 per cent of the 10 per cent hotel tax collected in the resort. The municipality is looking for an additional 2 to 6 per cent from the province, which could bring in several million dollars.

Other communities in the Resort Collaborative, such as Tofino and Golden, have bought into the formula of getting more hotel tax based on the amount of tourism generated in their communities.

Whistler’s hotel tax revenues, which totaled $3 million in 2005, have been in decline since 2001, when they were close to $4 million. Last year saw the biggest decline to date (see sidebar).

The 2006 hotel tax projection is not healthy, down again for the fifth straight year to $2.9 million.

Hotel tax money is used to fund village maintenance, the free village shuttle, Tourism Whistler, and special events, including the Olympics.

Those costs are continuing to rise. In 2005 they were $2.2 million. They are projected to be $2.9 million in 2006. Local organizations have also been asking for more money from the hotel tax. Tourism Whistler’s municipal funding has increased from $525,000 in 2005 to a projected figure of $810,000 in 2006. The additional funds are to go towards more resort marketing.

In 2006 the budget proposed sees the Arts Council receiving $100,000 from the hotel tax, B.C.-Canada House in Torino will get $125,000, and Celebration 2010 will get $50,000, to name just a few demands on the hotel tax.

And more than $2 million in 2006 is already earmarked for funding capital projects such as the library. All these demands have put the hotel tax reserve in the red.

"We have been investing in the success of the resort using hotel tax reserves," explained Melamed. "And now with the drop in tourism revenue and hotel tax receipts we’re not able to contribute into reserves. So our reserves are going into the negative."

That hasn’t been a problem in the past few years but looking ahead, the financial picture is starting to look a little grim.

"We haven’t actually begun yet to compromise our operational requirements but we will if it keeps declining and we can’t top it up," said Melamed. "We do have other reserves that might be transferred over but again, that’s contrary to good fiscal policy."

However, as an example of tight times council has been unable to meet its long-term goals to fund events associated with the 2010 Games. In 1999 council pledged to set aside $1 million each year in an event support reserve. That reserve should be at $8 million in 2006, but it is forecast to be only $1.1 million. This year Whistler can only afford to contribute $225,000 to the event support reserve.

The mayor was reticent to speculate on what the stumbling blocks are for provincial approval of financial tools.

But the area’s MLA shed some insight into the dilemma, though she cautioned she was not a part of the recent Resort Collaborative talks.

"The issues are very complex and complicated," said MLA Joan McIntyre.

"Any policy they make, or any decisions they make, has ramifications all around the province."

So while she sympathized with Whistler’s plight, and knows the resort is "chomping at the bit" for the financial tools, she said creating new tax policy is a significant step.

Councillors Gord McKeever and Tim Wake believe staying the course is Whistler’s best option. But the lines of communication need to be expanded.

"Frankly the challenge, I think, is neither of us have done a good job of really engaging the other," said Wake.

"Clearly we need to get others involved in the conversation and we need to have more conversations. It sounds simplistic but I actually think it’s as simple as that. We’ve been trying basically one route of communication and we need to probably explore five others."

McKeever supports the mayor’s efforts in Victoria and believes it’s a key component to getting the province on side.

"I’ve felt for a while that we need a stronger relationship with Victoria and it needs to be on a politician-to-politician level," he said. "We just have to keep pressing our case at this point."