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Budget reveals pressure on new financial tools

"$6 million doesn’t go a heck of a long way"

By Alison Taylor

Even with a projected $30 million cash infusion to the municipal budget over the next five years, Whistler’s hotel tax reserve could be $4 million in the hole by 2011, according to the draft financial plan.

The plan also shows Whistler will be funneling $10 million into its 2010 Games Reserve over the next five years to pay for some of its Olympic costs.

Council approved the draft figures of the Five Year Financial Plan 2007-2011 at Monday’s council meeting.

While the budget is not yet complete, it reveals for the first time how Whistler will be using its new financial tools — the additional 4 per cent of hotel tax revenue from the provincial government which translates to roughly $6 million more every year. Whistler secured that funding from the province earlier this year after several years of lobbying for financial help to run the resort. The budget shows just how critical that funding was to the resort municipality.

“The community will notice that $6 million doesn’t go a heck of a long way,” said Mayor Ken Melamed at Monday’s meeting.

A large portion of the new money — $2 million every year — will go into the Affordability Reserve. That money will be used to fund the $130 million Olympic athletes’ village for the next four years.

Other expenses to be funded from the new money include $250,000 for a resort business plan in 2007, a major initiative that came out of the Whistler2020 economic task force. It is designed to be a resort-wide business plan to look at the global resort economy.

The financial tools will also pay for several capital projects worth at least $12 million over the next five years, the details of which are not included in the draft budget.

“Suffice to say there are a number of capital projects that have been determined that will enhance the resort that have been deemed to be funded by this (additional) hotel tax,” said the mayor after the council meeting. “They’re tourism amenities so they shouldn’t be coming out of the general tax revenue.”

For example, some money will be spent on converting the proposed medals plaza on Lot 1/9 to a post-Games community legacy in the village.

The additional hotel tax revenue will also pay for event support, the village host program, village maintenance services, and grants to the Whistler Film Festival and the Whistler Arts Council.

By 2011 the fund will be more than $4 million in the hole.

“Over the next couple of years we’re going to be working towards obviously bringing this number down and looking at different ways to… accommodate this within our budget,” said Melamed.

He also highlighted that the annual $6 million in additional hotel tax revenue (four per cent of the 10 per cent the province collects on all hotel rooms) is a conservative estimate by staff. The more hotel rooms Whistler sells in the coming years, the more money the municipality recoups from the province.

Of the $10 million budgeted from the additional hotel tax to go into the 2010 Games Reserve, $2.3 million will be used by the municipality's 2010 Games Office from 2007 to 2010.

Other 2010 expenditures over the next four years include:

• $900,000 on 2010 Special Operations,

• more than $1 million for Games Office HR,

• $1.4 million in Communications/Collateral, and

• $200,000 in 2010 gifts/ hosting.

The budget also shows a $125,000 line item for the Beijing Mission in 2008.

Spending from the Games Reserve will ramp up every year, hitting just over $4 million in 2009 and $4.4 million in 2010.

The year after the Games the reserve is projected to be more than $700,000 in the red.

The draft budget also outlines the regular two per cent hotel tax spending that Whistler has been getting from the province for years.

That annual $3 million contribution will continue to pay for the free village shuttle as well as more than half a million dollars each for Tourism Whistler and tourism development. The 2 per cent hotel reserve balance is expected to be $1.8 million by 2011.

The municipality cannot approve a budget operating at a deficit. While the four per cent hotel tax reserve is operating in the red, other municipal reserves balance out that deficit.

Every year the municipality re-evaluates its spending priorities and projects may drop off if there isn’t enough funding in the budget.

Councillor Nancy Wilhelm-Morden praised staff for preparing the plan in a timely fashion. This is the first time in several years the budget has been ready by the end of the year.

The plan will go to the public for feedback in early January.