Provincial budget leaves a cloud over city

Vancouver Courier

by Allen Garr

It’s no secret that the city is in a fiscal pickle. Revenues have dropped off the cliff, particularly development permit fees, which plunged about $20 million with the construction slow down.

There is a hiring freeze as a result. Temporary employees, some on the payroll for years, have been chopped. And there is a “shared services review,” part of the city’s budget process that will result in service cuts and probable layoffs.

But if the city was expecting relief from the provincial budget update delivered this week, it didn’t come.

There was some good news of sorts. Following Ontario’s lead, municipalities will be exempt from any additional tax burden because of the harmonized sales tax (HST). They will pay the HST on goods and services, but will get a rebate for any amount over what they are now paying in provincial sales tax.

What isn’t clear, though, is whether strings will be attached to that rebate and whether it will be contingent on being used for specific purposes dictated by Victoria.

There is also some assurance the province is still on board to fund the construction and operating costs for the remaining eight of 14 public housing projects being built on city-owned land. There is a catch, though, one that I’ve noted in the past; funding is dependent on profits the province will make from developing land where the Little Mountain housing project now sits. And there is still a tug of war going on about the city giving the developer a demolition permit before there is some kind of commitment to accommodate the 11 families who still live on the site.

Budgets can be deliberately vague when governments want them to be and that’s the case here in areas of funding for infrastructure.

What TransLink will do for extra money is hard to figure. In fact, the province has ducked the issue. Rather than agreeing to demands from the appointed transit authority board (made up from a list of provincial nominees) and the region’s council of mayors for $450 million for future costs, the province ordered a review of the organization.

Meanwhile one source of revenue, the tax on parking which flowed into TransLink coffers, will disappear with the introduction of the HST. Whether that money is ever returned to TransLink is anybody’s guess.

Much can be gathered from items that are simply left out of the budget. One example is the film tax credit. No mention was made of that in the budget documents.

The city has lobbied over the years to have the province match tax credits offered elsewhere in the country. That has been essential to building the industry here. Now we have fallen well behind. While we offer a 15 per cent tax credit on labour, Ontario and Quebec offer 25 per cent on labour and services. To no one’s surprise, film production is moving east.

But as Vancouver’s finance committee chair Raymond Louie points out, we really won’t know the full impact of the budget for some time–not until all the cuts to social programs and organizations play out.

Many arts groups that had their grants approved by Victoria were told those grants would be cut. There was a furious response in the arts community. Some organizations had already spent the money based on the original grant approval.

Then, less than 24 hours after the government introduced a budget Tuesday with the cuts they said were necessary, they changed their minds and reinstated the grants.

Finally, the squeeze put on the school board by this budget could ultimately mean pressure on the city. Resources for child care programs will likely be cut.

Expect the city to be asked to step up to cover those costs. You can also expect fees to rise for any number of social services now being provided in Vancouver because, as Louie says, “the city is in no position to fill any gaps.”

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