Skip to content
Join our Newsletter

RMOW finances holding steady

Municipality finished 2007 in financially strong position, but wary of future budgets

There hasn’t been a time in its history when the Resort Municipality of Whistler has been committed to so many large capital projects or when there was so much uncertainty over the long-term financial impacts of the limits placed on development.

The good news is that the municipal balance sheet for 2007, presented at the Aug. 25 special council meeting, shows Whistler’s equity position as strong — despite the need to contend with large capital projects like the sewage treatment plant upgrade and compost facility, and a drop in revenues through changes to the Class 1/6 property tax classification.

The RMOW’s financial equity at the end of 2007 was $57,271,216, down approximately $5.7 million from the previous year. Overall, investment in tangible capital assets is up $46 million to $285 million.

Part of the discrepancy in equity comes from the fact that some capital projects are ongoing, such as Cheakamus Crossing, the athletes’ village neighbourhood — it’s difficult to budget precisely when contributions and expenses related to projects occur over several fiscal years.

The other part of the discrepancy is the result of lower revenues, combined with higher municipal wages and operating costs.

Some capital projects cost less than anticipated, or were delayed through 2008. Lisa Landry, general manager of economic viability for the RMOW, says the 2007 Annual Report includes several projects budgeted for 2007 but not completed by Dec. 31. As a result there was a discrepancy between actual expenditures and what was budgeted at the start of the year.

For example, the municipality expected to complete a $3.5 million takeover of Maurice Young Millennium Place in 2007 and included that as an expenditure in the budget. Negotiations with stakeholders took longer than expected, however, and the closing date has been delayed at least until the end of this month, September 2008. In the meantime the money has remained in the capital reserve fund.

“I’m anticipating that capital reserves will go down in 2008, but we will be doing that analysis in September for the third quarter after we’ve had a chance to sit down with all the departments and review our capital expenses to date and for next year,” she said.

Overall, municipal expenditures for 2007 were budgeted at $142,184,432, but came in considerably lower at $101,511,634.

Municipal revenues in 2007 also fell short of what was budgeted, with $93,528,861 in actual revenues in 2007 collected compared to an expected $111,845,358 — despite about half a year of receiving an additional four per cent of the hotel tax.

The difference between revenues and expenditures was a deficit of $7,982,773, or $5,659,760 when an issuance of debt for taking over the compost equipment from Carney’s Waste Systems was taken into account. That deficit will be carried over to the 2008 budget and covered by the appropriate funds.

The RMOW has always received two per cent of the hotel tax collected, but in 2007 Whistler began to receive another four per cent. As a result, hotel tax revenues for 2007 were $11,106,000 compared to just $6,012,624 in 2006. The first complete year for collecting the 6 per cent hotel tax is 2008, when the municipality is expecting to receive roughly $7 million from the additional four per cent tax, on top of roughly $3.5 million from the existing two per cent tax.

Most municipal departments came in slightly under budget, which Landry says usually reflects the fact that many departments had staff movement through the fiscal year and saved money for wages.

The 2007 budget also took into account the province’s ruling on the Class 1/Class 6 property tax issue, where owners at various condo hotel units were taxed at two different rates. The resolution cost the municipality an estimated $2 million in revenues in 2007.

As well, the RMOW increased employee salaries on par with workers at six comparison municipalities following a prolonged strike by Vancouver workers last summer. The result was an increase in municipal wages and salaries to $20,892,999 in 2007 from $18,991,392 in 2006, a difference of $1.9 million. Those pay increases were retroactive to the beginning of 2007, and are included in future budgets.

The municipality also spent about $3.5 million more on goods and services than in 2006, while interest and debt charges went down slightly. The biggest expenditure increase was in capital spending, which was $47,756,557 in 2007 compared to $13,124,374 in 2006.

Landry says it’s difficult to say how the increase in expenses will impact property taxes, but the municipality is facing a shortfall of about $1.3 million in 2009 after a shortfall of $3.5 million in 2008. The province has also cut its share of the tax bill again in 2007, keeping actual residential tax increases to about 1.9 per cent for Whistler residents. Those provincial taxes could go up or down, relative to the rest of the assessments in the province.

“I remember in the early 2000s when we were taking a greater and greater share of the provincial tax bill because our assessments in Whistler were so much higher than the average in B.C. — which is why we applied to get the residential tax assistance program,” said Landry. “Now that tide is reversed, and real estate in Vancouver and other places like Rossland have seen huge increases in value. That has been good for Whistler, but it’s hard to say what will happen in the long term.”

Mayor Ken Melamed said the big picture is that Whistler does have a strong balance sheet and a well-balanced fiscal approach.

Much of the current strain on the budget is related to capital expenses, he says, which is the result of bad timing. It was never the intention for Olympic projects like Cheakamus Crossing and the Lot 1/9 Celebration Plaza to take place at the same time the municipality is upgrading and expanding the sewage treatment plant, closing and moving the landfill and waste transfer site, installing a composter, taking over ownership of Millennium Place, and funding construction for a new library that opened this past January.

“Part of the big picture we’re trying to paint going into the budget season is that, yes, we do have one of the largest capital programs ever but there are good reasons for that,” he said.

“For example, the library was a millennium project that was supposed to be completed in 2002, and for a variety of reasons the project was delayed and delayed. The wastewater treatment plant was also supposed to be completed by now.

“The good news is that once these big projects are largely accomplished and done we should be able to kick back and relax without any new major capital investments for a while. The community has always had ideas, and we’ll continue to review annually what’s necessary to keep the resort vibrant and healthy and to reinvest in our facilities, but my hope is we can use the investments made during the Olympics to relax for a while without any major projects coming forward.”

The municipality recently established a new financial review steering committee to give advice on revising its long term financial plan.

The municipality is working to replace the last long term financial plan that was written in 1999, says Landry, and didn’t anticipate expenses like the Olympics, changes to the tax code for Class 1/6 properties, the increased share of hotel taxes, or other circumstances.

“The object is that we’ll be able to plot our future and gain some greater comfort about our financial well being,” said Melamed. “It’s not that there’s anything to worry about, we have the basic requirements and fundamental ingredients for a successful resort, but budgeting is very important and we need to understand the best ways to balance between things like contributions to the capital reserve, revitalizing infrastructure, and renewing the resort and services we offer our guests.”

That said, Melamed believes people can probably expect property tax increases in the future.

“We did some work benchmarking numbers, and if I recall the average tax increase in B.C. is somewhere between two and five per cent… and Whistler has not had a tax increase above the cost of living until this year. The increasing costs were funded by new growth, and Whistler taxpayers had a comfortable ride.”

With Whistler reaching buildout and development revenues expected to dry up in the near future, Melamed says that some hard budgeting and new tax revenues will be required just to maintain the status quo.

“It goes without saying we should prepare ourselves for potential tax increases, because in order to keep (the increase) low this year we severely compromised our capital reserves. In 2008 the contribution was around 10 per cent, when it should be 17 or 20 per cent (of revenues). We can’t be fiscally responsible and continue to underfund those capital reserves.”