As the global economy slackens and Whistler’s tax base levels off due to buildout, another economic factor may affect the area: municipal spending will likely dip over the next few years.
At a time where senior levels of government are talking about revving up the economy by putting money into infrastructure and capital programs, spending by the Resort Municipality of Whistler has peaked. Most of the infrastructure projects that needed to be done before the 2010 Olympics are wrapping up.
While many may welcome this reduction in municipal spending — it is generally acknowledged that balancing the 2009 budget without increasing property taxes will be a challenge — it also means fewer or smaller contracts for local companies that provide services to the RMOW.
Over the past four years, money spent by the RMOW in the community has increased annually.
In 2007, the RMOW wrote cheques to more than 67 local businesses, amounting to more than $30 million. (Pemberton and Squamish-based businesses are not included in this tally. Also, data is based only on contracts worth more than $25,000.)
By contrast, the municipality spent approximately $18 million
with about 66 businesses in 2006, and $7 million on 64 businesses in 2005.
Much of that increased spending was on capital projects, and
many of the capital projects were related to preparations for the Olympics.
In 2006 RMOW capital spending increased 218 per cent over the previous year. The following year, in 2007, that amount increased again by 264 per cent.
Some of this capital spending was paid for by outside grants,
including VANOC’s $35 million contribution toward the athletes’ village and the
federal-provincial infrastructure program’s $13 million grant for the
wastewater treatment plant upgrade.
“In 2007, RMOW began the main construction work building the athletes’ village, as well as the construction of the WWTP,” said Lisa Landry, general manager of economic viability for the municipality.
“Primarily because of these two projects, the capital expenditure levels increased. As well, contribution from developers increased in order to record the $30 million in revenue the RMOW received from VANOC for the site servicing of the athletes’ village.”
Landry could not speak to spending changes in 2008 because the financial statements have not yet been prepared.
But now that the Olympics are just over a year away, construction in the valley is leveling off.
Jim Charters, whose company has been contracted by the RMOW for at least the past three years, said while the dip in municipal spending could impact Whistler Construction Co. Inc., it will not be any more than everything else happening with the current economy. This will just be another piece of the puzzle.
“The municipality has to do what they have to do to take care of our tax dollars,” said Charters.
“It is not our main thing. We built the library, and we do the odd thing with the municipality, but it is not our main thing. I don’t know any companies where it is their primary source of revenue.”
But the local construction industry is already feeling the pinch of the economic crunch beyond RMOW spending, said Charters. His company has been getting calls from as far away as Saskatchewan and Alberta from people looking for work.
“The bit of silver lining to this whole thing is that… pricing should be softening, and you are going to be able to get things done without the crazy cost escalation that we have gone through over the past couple years,” said Charters.
“We are seeing that already. Trades are more competitive, so it is turning into a consumers’ market.”
Materials, though, will probably increase because the Canadian dollar is now about 80 cents to the U.S. dollar.
Brian Brown, president of R. B. Brown Land Surveying Ltd., has no idea how municipal cut backs could impact his business. But he said surveying is a funny business because nobody hires a surveyor unless they have to.
“It is not usually discretionary spending,” Brown said, adding that while his surveying company has not yet felt the impact of the economy, businesses in the Lower Mainland are laying off employees.
To prepare for Whistler’s business climate after the Olympics, the Whistler Chamber of Commerce plans to hold a strategic planning session in early 2009.
“We’ll prepare for that session by speaking with other Olympic cities and learn from their experience post-Games, as well as speaking with our membership about what they think and need post-2010,” said chamber president Fiona Famulak.
She said the chamber already knows Whistler’s business climate will probably be very different from today.
“In addition to business potentially falling away, there may be
new businesses in Whistler that decide to stay as a result of their success in
Famulak added that she is glad that Mayor Ken Melamed and Barrett Fisher, president of Tourism Whistler, will both be sitting on the chamber’s board this year.
“I am confident it will result in a well-considered, practical way forward, that will translate into support, resources and tools that will benefit our membership and help them to lock in their business success post-2010,” she said.