Vancouver needs 9% annual property tax increases over next 5 years to balance budget: staff

Homeowners in Vancouver are being warned to prepare for property taxes to rise.

More property tax hikes could be on the way for Vancouver homeowners.

That’s the warning from city staff in their recently released 2024-2028 budget outlook.

It’s yet another financial blow during a time of soaring cost of living and rapidly rising inflation rates.

A report from the city’s director of finance says an average property tax increase of 9 per cent annually over the next five years is needed to balance the budget.

That works out to be about an additional $116 per year for a median strata property.

“Staff are acutely conscious of the implications for tax and utility rates and are focused on identifying opportunities in the 2024-2028 budget outlook for new revenues and operating efficiencies,” reads the report.

However, the director of finance says that without a substantial reallocation or reduction of existing operating funding, or reductions in capital investment, delivering a balanced budget will depend on property tax and utility fee increases that exceed historical averages.

The report says the outlook is driven by higher fixed costs to provide existing service levels.

It also says the implementation of key initiatives from the 2023 budget, such as the hiring of additional police officers, renewal of infrastructure and public amenities, and Metro Vancouver levies are factors.

The director of finance says these financial challenges have exceeded the city’s ongoing measures to reduce costs.

Staff say that, despite increased economic activity post pandemic, the budget continues to be impacted by rising costs driven by high inflation, a tight labour market and supply chain challenges.

“While economic forecasts suggest that inflation will normalize, many of the city’s costs are driven by factors which differ from general inflation,” reads the report.

The 2024-2028 capital expenditure outlook of $730 million per year is based on the expected delivery of existing projects that are underway and continued progress on delivering the 2023-2026 capital plan.

The report says new amenities to address population growth, and meet goals such as the Climate Emergency Action Plan are also driving up operational costs.

“In order to deliver this increased level of investment, staff are working to optimize key city processes, preserve and re-prioritize financial capacity, and augment delivery through external capacity,” reads the report.

Staff will also continue to support the Mayor’s Budget Taskforce.

The initiative was announced back in April to ensure tax dollars are being spent effectively and efficiently.

Its inception came nearly five weeks after the city approved an operating budget for 2023 totalling $1.97 billion, and a property tax increase of 10.7 per cent.

Staff say the report is just a starting point, so that council can begin its 2024 budget planning.

It's set to debate the outlook at the next council meeting on Tuesday.

Residents will also have a chance to weigh in through the annual online Talk Vancouver budget survey beginning in August.

In response to the outlook, the Canadian Taxpayers Federation issued a statement Friday, demanding that the City of Vancouver immediately cut its spending to avoid the forecasted tax hikes.

The B.C. director of the federation, Carson Binda, says it’s “completely unacceptable” for City Hall to consider raising property taxes by nine per cent annually over the next five years.

“It defies logic that Mayor Ken Sim and his council are even musing about higher taxes. Sim and his council need to start looking for real savings and controlling spending, instead of slapping taxpayers with ever rising tax-bills,” Binda said in the release.