Borrowing powers but no bailout as B.C. responds to local governments, businesses
VANCOUVER -- Cash-strapped local governments and small businesses struggling during the COVID-19 pandemic are getting help from the provincial government, but not the bailout some had been calling for.
At a teleconference on Thursday, the finance and municipal affairs ministers outlined a series of reduced or delayed payments for businesses and municipalities, plus expanded borrowing powers for local governments.
To start, municipal governments can now borrow interest-free from their existing capital reserves to help pay for operating expenses, like wages, something they aren’t usually allowed to do under provincial regulations.
Provincial school taxes, which cities collect on behalf of the province, don’t have to be paid until the end of the year, allowing local governments to use the cash now. They’re also now authorized to carry any debt from the Municipal Financing Authority for two years instead of one.
With the unemployment rate rising and millions of Canadians applying for income assistance, many municipalities are bracing for large-scale defaults on property taxes. In Vancouver alone, a survey done by the city estimates 35 per cent of home owners won’t be able to pay part or all of their property taxes.
The City of Surrey says it's losing $4 million each month on average, while Vancouver has said it's losing around $4 million to $5 million each week. Vancouver's mayor had asked the province for $200 million in emergency financial support to help the city during the pandemic.
Following the provincial announcement, the city’s general manager of finance, risk and supply chain welcomed the reduction in the commercial property tax rate.
“The delay of the school tax payment in particular will be a significant help for Vancouver,” said Patrice Impey in a press release. “We are assessing the rest of the tax measures announced today to determine what additional tools we will have at our disposal.”
The City of Vancouver had temporarily laid off 1,200 unionized workers and has just told management and non-unionized staff their salaries will be rolled back 10 per cent and they’ll be expected to work nine out of their usual 10 days through the end of the year, for a savings of $7.5 million.
“I want to reassure you that the city is financially stable, we are not facing bankruptcy,” said city manager Sadhu Johnston. “These are temporary measures taken in unusual circumstances so that we can overcome these hurdles and get through this together.”
The province says its new measures should help local governments mitigate revenue shortfalls during the crisis.
"Many local governments have already shown leadership by taking steps to help people and businesses and maintain services, while addressing their finances," said Selina Robinson, minister of municipal affairs and housing.
"With these new measures, we are giving local governments new tools as a first step to ease their financial burdens and that of businesses in their communities now, and as we look to recovery in the months to come."
Support for small businesses
The B.C. government also announced additional reductions to the school property tax rate, lowering the total commercial property tax bills for most businesses by an average of 25 per cent.
As well, the date that late payment penalties will apply to some commercial properties has been postponed to Oct. 1.
"We know that B.C. communities and businesses are suffering from the economic impacts of COVID-19," said Carole James, minister of finance.
"We are providing further support by making additional temporary property tax changes to provide province-wide relief for business and local governments to help weather the pandemic, continue to deliver the services people count on and be part of our province’s economic recovery."
The province also announced a new support service hub for small businesses struggling during the novel coronavirus pandemic Thursday.
The B.C. Business COVID-19 Support Service is meant to act as one point of contact for businesses who are looking for resources available to them during the pandemic.
As of Thursday, advisors can be reached from Monday through Saturday by phone, email and live chat through Small Business BC's website.
"We know that business owners are worried about paying their bills and covering their payrolls, and our government is doing everything we can to help," said Michelle Mungall, B.C.'s minister of jobs, economic development and competitiveness, in a news release.
"There are multiple programs available, including the B.C. government's COVID-19 Action Plan, to support businesses through these challenging times."