Whistler's budget is undergoing some big revisions as a result of COVID-19, with reduced spending across the board—but no changes to proposed tax increases.
At its May 5 meeting held over Zoom, council gave first three readings and adopted two bylaws related to the 2020 budget—an alternative tax collection scheme bylaw and an amendment to the five-year financial plan—and did the same with the 2020 tax and utility rate bylaws.
Under the provincial Emergency Program Act enacted by minister of public safety and solicitor general Mike Farnworth on March 26, municipal councils may adopt a bylaw at the same meeting it receives third reading.
By law, all municipalities in B.C. must have their budgets passed by May 15.
While the tax rate bylaws are the same as proposed back in November—a 2.8-per-cent property tax increase in 2020, along with two-per-cent increases to sewer, water parcel and solid waste fees—staff are proposing drastic changes to the five-year plan and related projects list.
In general, staff and council set four main guiding principles in reviewing the budget, said recently appointed chief administrative officer Virginia Cullen.
"No. 1 was remove as much spending as we can practically manage while maintaining essential and core municipal services; the second one was only remove planned spending that doesn't expose the Resort Municipality of Whistler (RMOW) to unacceptable risk—so that would be either contractual or public safety," she said.
"The third would be maintaining limited strategic spending which is focused on sustainability, tourism recovery ... and then the fourth would be, wherever financially viable, to remain spending on the existing capital priorities, so environment, climate change, those kinds of things."
The end result is a budget that looks much different than what was first proposed in November 2019.
In total, 96 of 164 projects are proposed for amendment, with total 2020 proposed project spending reduced by $12.7 million (from $46.3 million to $33.7 million).
Some projects receiving big reductions include the Village Washroom Project (from $4.5 million to $2.7 million), Valley Trail improvements (one tender pulled and another to be reviewed for a total reduction of $1.7 million) and the White Gold Utility Undergrounding project (from $3.5 million to $1 million).
In regards to the Village washrooms, two out of three will still be constructed this year—at Whistler Olympic Plaza and the Lost Lake PassivHaus—while the third (at the Gateway Loop) will be deferred.
For the most part, the amendments introduce a series of smaller cuts to a wide range of 2020 projects, with no municipal departments spared.
By department, the cuts amount to $7 million from infrastructure services, $4.9 million from resort experience, $632,526 from corporate and community services and $81,000 from the CAO's office.
"Many of the projects have been deferred to 2021 or beyond; some will be reviewed again and some have just been removed altogether," Cullen said. "Because it's an holistic view of the whole project picture, there's not going to be impacts in one particular area. I think it's more spread out across all of them, so it's hard to say what's going to be felt the most by the community."
While the FireSmart program is mostly being maintained by redeploying staff (in lieu of new summer hires), some thinning work on the Valley Trail and around the edges of parks won't take place this year.
Logistics around physical distancing are proving a challenge for FireSmart crews as well, said general manager of corporate and community services Ted Battiston.
"We think we'll be able to handle about 60 per cent of what was planned this year, picking up that additional work next year that we will not be getting to this year," he said.
"But for homeowners, the chipping, the bins and the work that they've come to rely on, we will be able to continue to do that all throughout the summer."
Community wildfire protection work will also continue, noted general manager of resort experience Toni Metcalf, with $800,000 maintained of the original 2020 spend for fuel-thinning work at Spruce Grove, White Gold and other areas, and the municipality has also committed to filling the climate change coordinator position—recently vacated by Max Kniewasser, who resigned "due to family matters," a spokesperson said—despite a municipal hiring freeze* (a fact appreciated by Coun. Arthur De Jong, who voiced his thanks during the meeting).
PAYROLL, RMI and RESERVES
With the closure of local facilities—combined with the frozen local tourism economy—the RMOW is expected to lose between $6 million and $11 million in 2020 non-tax revenues.
While the single biggest impact on municipal expenses in the general fund is on payroll—the 2018 Statement of Financial Information (SOFI) showed $32.7 million in total payroll costs—there are no plans to lay off any additional staff beyond the 224 casual and auxiliary employees already furloughed, Cullen said.
The 2019 SOFI report is still being worked on, "but what I can say is that the casual and the auxiliary layoffs, as well as deferring the vacancies ... results in a $2.2-million difference (to payroll expenses)," she said.
As it relates to the provincial Resort Municipality Initiative program—which pays for improvements to the tourism experience in Whistler and other B.C. resorts—the RMOW is not currently forecasting any changes to incoming revenues.
The provincial government committed $39 million in RMI funding over three years in its 2019 budget; Whistler got about $7.5 million this year.
Contributions to reserves (which are used to pay for project spending) are down $4.4 million this year in light of the pandemic, and forecasted to stay below pre-COVID levels into 2024.
"The growth of the reserve balance must necessarily follow growth in assets," said director of finance Carlee Price, in a presentation to council.
"Maintaining the physical things that exist in our community requires that we set aside money today for their maintenance."
With that in mind, the RMOW examined what it would look like to wipe out the proposed 2.8-per-cent property tax and go with no increase instead, forgoing the additional $1.8 million in tax revenues expected this year.
"The first thing to note is that the tax requisition amount for each year of the five-year financial plan has been calculated to deliver the service level and project asks, and to progress the community towards reasonable reserve balances—a change in the tax requisition amount must necessarily be accompanied by a change in one of these balancing items," Price said.
Reducing taxes by using reserves, for example, can be remedied in future years, but "this remedy approach—an in-year tax cut followed by catch-up contributions in the years that follow—has implications for future tax-rate increases," she added.
"In our present case, reducing the 2020 tax requisition by $1.8 million, or 2.8 per cent, while continuing to aim for 2024 reserve balances in the $91-million range, would require an additional increase amount in years 2021 through 2024 of 1.4 per cent.
"That's an amount in addition to what's required to cover typical annual cost inflation, plus any service level or installed asset growth."
SHIFT TO ZERO OR STAY THE COURSE?
While council voted to keep the proposed increase at 2.8 per cent, there was one opposing vote in Coun. Ralph Forsyth.
"I'm really struggling with not going to zero," he said. "I'm open to your persuasion, but I really feel like, man, I'm taking someone's last hundred bucks."
(With a 2.8-per-cent increase, taxes on a residential property valued at $1.5 million would go up about $72, plus a $24 increase to utilities.)
For Coun. John Grills—who sat on the council that delivered three years of zero tax increases after some very high increases in the preceding years—it makes sense to keep things "as level as possible."
"From a business point of view, that's a really difficult thing for forecasting, to have things swing around like that," he said.
"I think a lot of work went into the original budget that had the 2.8-per-cent increase, and there is going to be additional costs to this municipality going forward with the effects of COVID, so I would rather keep the stability of the 2.8, and potentially avoid higher [increases] down the road."
While she said she was compelled by Forsyth's argument, Coun. Jen Ford also voted in favour after listening to her colleagues' comments.
"I think it's important for us to remember that municipal services, they were made public a long time ago to ensure that these services would be available during emergencies just like this," she said.
"A zero-per-cent increase really is kind of borrowing from our future ... whether it's replacing a major asset that benefits our community and not having that reserve there for that, I don't think anyone in our community would say that that kind of saving is not important."
When it comes down to it, annual tax increases are "a reality that results from inflation in real costs and the demands of prudent asset management," Price said.
"We unfortunately cannot wish them away, and we must consider in determining the requisition amount, in any particular year, the consequence of that decision on future years," she said.
"We understand the community is under pressure, both businesses and individuals, and we ask that the community recognizes the pressures on the municipal financial position as well."
With the alternative municipal tax collection scheme bylaw introduced and adopted on May 5, the penalty date for all property tax classes in Whistler is now aligned with the provincial date of Oct. 1, providing an extra three months for Whistlerites to pay their taxes before incurring a 10-per-cent late payment penalty.
Taxes will still be due on July 2, however.
It's no secret that COVID-19 has universally thrown finances for a loop, and municipalities are taking varying routes to address the new reality.
In Pemberton, officials changed course from a five-per-cent increase in 2020, reworking the budget to keep the increase to zero this year. (See page 28.)
While there are no true comparables for Whistler's budget—a multi-million-dollar behemoth of projects and spending that far outweighs the resort's population of about 12,000—municipal officials do look to other communities for benchmarking purposes when working on things like labour negotiations.
In those communities, the trend was to reduce initially proposed tax rates in light of COVID-19: in the District of North Vancouver (from three to two per cent); City of North Vancouver (4.58 down to two per cent); City of New Westminster (from 4.9 to 3.1 per cent); the Corporation District of Delta (from 3.5 to 1.75 per cent) and the District of West Vancouver (from 4.35 to two per cent).
While municipal officials have kept a close eye on what other communities are doing, "each community is unique with differing impacts to revenue, different age of maturity of assets and many other factors," a municipal spokesperson said in an email.
"While we can't speak to the decisions by other communities, the multi-year outcomes on taxes in other communities is a consideration."
Both Pemberton and Squamish had 2019 increases above six per cent, for example, the spokesperson said.
"Pulling single year (low) numbers without a longer horizon context is not the way we typically look at our budgeting," they said.
"In 2019, Whistler had the eighth-lowest (residential) municipal mill rate in the province (162 municipalities) and the third-lowest combined residential tax rates, in 2019. For commercial, we rank 42/162 on municipal mill rate and 17/162 on combined commercial tax."
**An earlier version of this story said Max Kniewasser was the RMOW's climate change coordinator. He has in fact resigned.