Editorial 

Time for tough choices, rather than financial tools

In the mid-80s Whistler sent an official delegation to Victoria to plead its case for a resort tax. As a resort municipality, the argument went, Whistler had to provide services and facilities for a large number of visitors, as well as the local population, and the standard model for local governments didn’t provide the means to pay for this. A special resort tax was proposed.

Victoria countered that a resort tax – a special tax on everything sold in Whistler – would hit residents as well as visitors. A more precise tool, targeting visitors only, would be an additional tax on hotel rooms. Thus was born the 2 per cent hotel tax.

In about 1997 Whistler’s council of the day and senior municipal staff made a tour of several Colorado ski areas to see how things worked in those towns. One of their discoveries was that local governments in Colorado weren’t so dependent on property taxes. In fact, many resort towns in Colorado collect taxes on all goods and services sold in their town. Whistler announced it was going to present a case for similar powers to Victoria.

In February of 2002, long before Whistler, Vancouver or the IOC had made any official decisions on the 2010 Olympics, Whistler held an open house to explain to residents some of the benefits of pursuing the Games. Among the package of goodies Whistler had been promised by Victoria, whether the Olympic bid was successful or not, was 300 acres of Crown land, a municipal boundary expansion, and new financial tools – some sort of mechanism that would increase revenue for the RMOW without increasing the tax burden on residents.

Three years later, despite the fact that the Liberal government in Victoria is announcing new money and projects on a daily basis in the lead up to May’s provincial election, there is no indication that additional financial tools will be coming Whistler’s way. The legislature is dissolved so there can be no new laws introduced before a new government is convened in the fall.

And it seems unlikely a Liberal government would be anxious to revisit the issue of financial tools. Long before the Liberals formed the government in 2001 they were working on their Community Charter. Drafting, consultations and re-drafting of the final legislation took another couple of years once they were in office. In that time a provision in the Community Charter that would have allowed local governments to impose local taxes was removed.

Today the Liberals would argue that Whistler, like other municipalities, has already been given additional sources of revenue – fines collected from traffic tickets issued within their jurisdiction, for example. And many local businesses would add that an additional tax on visitors, particularly at this time, is not what Whistler needs.

But the demand for more sources of revenue remains a constant theme at municipal hall. The 2004 Five Year Financial Plan states: "Whistler will pursue discussions with the Province of British Columbia about accessing other sources of revenues such as the sales tax, the property purchase tax, gas tax, the tax on liquor and a greater portion of the provincial sales tax on hotel rooms."

This year’s draft Five Year Financial Plan has yet to be made public even though the standard budget cycle, according to the 2004 Five Year Financial Plan, starts in September and concludes in December with public consultation, followed by budget adoption.

The challenges in preparing this year’s financial plan are significant. Whistler is likely facing its fourth straight year of declining business. Revenue from the hotel tax peaked at nearly $4 million in 2001 and then declined in each of 2002 and 2003. Last year Tourism Whistler was unable to forecast an estimate for hotel tax revenues. As well, property assessments, on average, are down in 2005 for the first time in recent memory. And the Class 1/6 issue of hotel taxes has also not been resolved. The seriousness of this issue was noted in last year’s financial plan: "At this time we face a series of large, outstanding, multi-year assessment appeals directly related to the classification debate. This creates financial uncertainty and continues to compound the issue. Tax revenues have already been eroded by several hundred thousand dollars for 2004 and, if a decision were made to move all, or a significant number of Class 6 properties to Class 1, it would result in a loss of 20 percent of current property tax revenues."

There are six financial principles listed in last year’s financial plan. The first is: We must live within our means. A warning followed:

"With current funding levels it will be difficult to cover the upcoming costs of maintaining a world class resort community, while providing for product and service enhancement.

"Property taxes cannot fund these costs alone. Tough choices will need to be made between new facilities and services and the appropriate maintenance of what we have."

In the spring of 2005, Whistler should be prepared to make some tough choices.

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