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Fiscal future likely to include bigger tax increase

Budget open house shows transit costs, disappointing parking revenues part of $2.8 million shortfall
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The municipal budget is a multi-faceted beast. It soaks up public dollars and spends them quietly. While residents don't underestimate the value of tax-funded public services, many question the inevitability of taxes floating skyward in a roofless house.

As the municipality reviews preliminary budget numbers for 2011 and beyond, next year's forecasted four per cent property tax hike is looking optimistic at best. It's probably going to be higher, but by how much depends on how the municipality decides to structure its budget.

Unforeseen changes to the 2011 financial plan have put the net negative impact on the municipality's financial resources at $2.8 million, at a time that reserves and the operations budget need to be flush. The ensuing fiscal tinkering is shaping our financial future.

Keeping tabs on the municipal budget is critical to local democracy - understanding it allows citizens to organize their priorities and participate in healthy discourse regarding public coffers and allocation of resources. Over the next few months, Pique is going to help you, the reader, do just that. The following is the first in a series of stories on the municipal budget that will follow the process from start to finish. We have tried to break it into easy-to-read segments that offer a clear view of the major issues facing the municipality in the post-Olympic epoch. While placating disgruntled taxpayers is as easy as cutting contributions to capital and doling out a tax break, public officials say that option isn't available if Whistler is going to keep its high standards. Here's why:

 

Reaching Build Out

In 2011, Whistler will experience its first year in a non-growth capacity since Myrtle and Alex Philip purchased property on Alta Lake in 1914. Simply put, all the development and expansion that will ever take place, has already been planned. Sure, some buildings will be torn down and others will go up, but Whistler's footprint has been stamped in the snow and it's not expected to grow. This phenomenon is referred to as reaching build out and it means the financial bolstering that comes with expansion is gone. To put it into perspective, in 1992 Whistler's total assessed value was at $983 million. In 2010 it's hovering around $10 billion and for the first time since then growth has flat-lined. The RMOW is responsible for caring for all for the new infrastructure and they do it with taxpayer's money.

"The actual increment of growth for last year was $130 million, which is 1.3 per cent of $10 billion so you think 'Oh wow, $130 million seems like quite a lot of money,' but really, when you put it in context of how that is in relation to the existing assessed value that we already have, 1.3 is really quite a nominal growth figure," said Lisa Landry, RMOW's general manager of economic viability. "And one half of one per cent (of growth) is the go forward (for 2011 and beyond)."

 

Operating Costs

Compounding the loss of growth revenue is the need to service existing facilities, many of which are going to require maintenance in the next five years. The good thing is that council forecast this in 2008, and spread a 19 per cent tax increase over three years to accommodate it. The bad thing is that unforeseen factors such as underperformance in revenue from pay parking and new transit fees are sucking up the buffer.

Strict provincial legislation dictates how the municipality can fund its services. Reserves go to infrastructure and are financed solely by property taxes. No other funding structure, such as the hotel tax, can grease that wheel. To keep them healthy, 20 per cent of the budget is allocated for contributions to reserves.

A few years ago, changes to the strata hotel tax implemented by the province cost the municipality $2.2 million in revenue it had come to depend on. As a result, reserves were reduced to 11 per cent. That number has been brought back up to 19 per cent, but Landry would like to see it even higher to account for future maintenance costs.

"People are expecting that we replace the services, particularly the infrastructure we have right now, and that means that we have to contribute to reserves in the future," she said. "A lot of this stuff was built at the same time, which means it'll blow up at the same time."

 

No One Likes a Show-Off

Face it. Everyone thinks Whistler is a playground for the elite. That makes it difficult to secure grants from senior governments to finance infrastructure improvements, a resource regularly tapped by other municipalities.

"Basically, we're on our own. That is how the rest of the province looks at us - 'You guys are rich and you should be providing for stuff on your own,'" said Landry.

 

Where Tax Dollars Go

Ben Franklin wasn't wrong when he said, "In this world nothing can be said to be certain, except death and taxes."

Under the Community Charter, municipalities are handcuffed by a funding formula when they spend their revenue, which means the municipality can't furtively spend your money.

The two per cent Additional Hotel Room Tax (AHRT) is restricted to tourism-related programs, tourism-related infrastructure and tourism-related expenditures like the construction of Celebration Plaza and village maintenance. It can't dig the municipality out from under a build up of infrastructure-related or build-out associated costs.

"Probably the key principal that we have to repeat over and over is that the hotel tax cannot be used to reduce our operating budget. It cannot be used to reduce taxes," said Whistler Mayor Ken Melamed, who was on hand at the open house. "Rising taxes are a general trend that people are going to have to get used to. That is reality.

"As provincial and federal governments look to control costs they continue to download responsibility at the municipal level, as a result, municipal taxes have been going up. Whistler's position is unique, but in general we're like everybody else. There's not enough money to provide all the services that everybody wants at the price they're willing to pay."

 

 

*****CAN WE BOX THESE NUMBERS PLEASE ****EDITING DEPT****

Tax dollars at work

$10,275,000 to reserves and transfers

$3,127,985 to debt repayment

$24,382,234 to municipal services

$8,639,000 to utility services

$27,225,262 transfer to province

2010 Property Taxes Levied

$14,808,601 to utility parcel taxes and user fees

$27,225,262 to Provincial and Regional Taxes

$31,665,628 to Municipal property tax

Pay Parking Falls Flat

When council was developing a strategy to cope with financial pressures associated with the build out and loss of revenue due to the Strata Hotel Class One-Class Six issue, it decided to raise taxes by 19 per cent over three years and implement pay parking to cover the remaining losses. They didn't anticipate that drivers would avoid the new pay parking system, nor did they predict that free parking in Lot 4 would compound the issue.

"We decided we were going to stop subsidizing people with free parking on the back of the taxpayer, so we instigated a fee and what's happened is the projection isn't coming in as anticipated and the projections for Lots 1, 2 and 3 are off," said Landry. "Back then, in 2008, we thought we'd have our first full year of paid parking to fund the last part of the shortfall. And it's not providing the revenue we anticipated at that time."

Projected budget revenue from the day lots was pegged at $2,043,000 annually. Data extrapolated from lot use between July and October, 2010 and projected over 12 months put the total at $939,255, or 46 per cent of estimated annual predictions. Because the municipality is restricted in how it raises funds, the pay parking deficit puts the responsibility back on property taxes.

Ever-Increasing Transit Costs

Transit costs are shared evenly between BC Transit and RMOW. Bus fares generate around $2 million in revenue that the municipality retains, and the remaining balance is called the net municipal share (NMS). In 2008, Whistler's net NMS for transit was $900,000 per year. In 2009 and 2010, transit costs were increased by $1.4 million and were factored into the forecasted budgetary formula to cover the cost of things like new buses, a new facility, and a new contract. Unfortunately, BC Transi overestimated revenue projections by $800,000, calling for an actual budget adjustment of $2.2 million and creating a new NMS of $3.1 million. New costs to cover the HST, insurance, vehicle leases, Request for Proposal (RFP) and service increases moved the NMS to $4.6 million, creating a gap of $2.3 million for the RMOW.

"We had, basically, $1.8 million of revenues that didn't materialize that were budgeted for and new costs as a result of all those items for about $1.5 million," said Landry. "When they (BC Transit) have revenue projections that are $800,000 too rich, then that comes back on your net municipal share because BC Transit says 'Oh, we funded our half," so that's a problem."

Pay parking revenues are earmarked for transit costs, so underperformance in the day lots and conference centre greatly reduced the municipality's ability to cover BC Transit's caprice.

"We thought that (last year) was the end of it, that we would have a mature system at that point and that would be the last bit of expansion and everything else," continued Landry.

 

The Public Weighs In

Long-time resident Karen Blaylock attended the open house with her husband, Chuck. While they weren't surprised, or even upset at the prospect of a tax hike, they were concerned for what it will mean for the average family in the community.

"They keep putting up the price of the Meadow Parks Sports Centre and they took away free skiing at Lost Lake Trails on Monday afternoon. They seem to do the minimum to try to keep young people able to afford things here," she said. "We think it's going to have a big affect if everything keeps going up. Where are the young people going to come from that can afford to work and live in Whistler?"

Blaylock pointed to Hawaii's state sponsored kama'aina rate, which provides significant discounts to locals. "Nothing is being done like that in Whistler for the young people who make this place work," she lamented.

 

Thinking Forward

Improving the arrival and departure experience of visitors is on the municipality's to-do list. Rough plans for a central transportation hub have been sketched out, though location and overall esthetic have not been finalized.

"...It will service the tour buses and all the bus lines so tourists can come in and have one central place where they can go for checking into their hotels, lockers, with a bit of a retail service thrown in," said Harry Kim, RMOW's general manager of environmental services. "We're looking for ways to generate revenue for the city as well, instead of relying totally on the tourism industry and property taxes. We're trying to think outside the box like a typical municipality, to be more like a private company that is looking after the long-term profits.