Expenditures that have traditionally been the responsibility of the federal and provincial governments accounted for the equivalent of almost 15% of the City of Vancouver’s annual operating budget.
Based on the recent breakdown of city staff expenditures, as requested by city council, city government spent at least $219 million in “downloaded” costs from senior governments in 2021.
About $168 million went to affordable housing, including $158 million for construction costs and about $10 million for operating costs each year. This includes temporary modular housing, SROs, supportive housing, and off-market rental housing. Another $23 million was spent on child care, including $21 million for construction and $2 million for operations.
The city has also spent $27 million a year on operating costs related to addressing social issues affecting the city, including $4 million for measures to address the mental health and opioid crisis. , and $23 million for homelessness.
The federal and provincial levels of government covered only 20% of these downloaded costs, or $44 million. It covered 8% of the city’s affordable housing expenses ($14 million), 50% of child care expenses ($11 million) and 80% of homelessness expenses ($23 million) .
The city offers land for affordable housing and child care, as well as the in-kind contributions to community amenities (CAC) that it negotiates and secures from developers as part of the rezoning process. By directing developer-funded and built CACs toward affordable housing and child care, it reduces the city’s ability to support other growth-related amenities and infrastructure—serving the general population—that are explicitly the responsibility of the municipal government.
Federal and provincial investments in these areas saw significant declines in the 1980s and 1990s. City staff date that the city government voluntarily began increasing funding for these expenditures beginning in the early 2000s to address the growing problem of homelessness, initially in the form of land and capital grants for shelter and housing. Over time, the city’s support has expanded “in part as an effort to signal to higher governments the importance of these issues and gaps in the community, and as an effort to incentivize their engagement.”
Homelessness, mental health and opioid issues also add to city operating costs in other departments – a second-order effect that has resulted in additional costs estimated at $20 million.
For example, roaming and encampments in streets and parks result in higher costs for the Park Board, engineering, sanitation, fire and police departments.
In recent years, firefighters and police have seen their non-traditional workload increase to cover the growing number of overdose response calls, dealing with naloxone administration, deaths and unrest.
An estimated 49% of the total number of calls to firefighters are for medical issues, including overdoses. Similar calls to the police also prevent them from doing investigative work and dedicated patrol calls.
The increased call volume and longer duration of answering calls leads to a higher rate of burnout for firefighters and police department personnel.
“Collectively, the impacts of downloading, combined with the municipality’s role in actively taking responsibility for certain service delivery areas, have resulted in significant ongoing pressures on the City’s budget and property taxes,” reads -on in a memo from City staff.
“This creates challenges for councils who have to make tough choices between providing important services and raising property taxes to provide those services, which as a regressive form of taxation can impact negative on residents and businesses. It also points to an opportunity to improve collaboration with senior levels of government, to ensure that service delivery, as well as funding policies and tools, are aligned across all levels of government to optimize how taxpayers’ money is used to deal with the complex challenges facing society.
City staff say there is now an initiative among BC municipalities, through the Union of BC Municipalities, to “pass through” some of these costs to federal and provincial government, because “they are the most effective level of government to deliver the service, and to provide more revenue tools to the municipalities to finance the activities better delivered at the local level.
In addition to direct downloaded costs, the city says it also incurred $35 million in additional operating costs last year due to senior government legislation and regulatory changes that impact city budgets. This includes $15 million for employer health tax and $10 million for changes to the collective bargaining framework.
Like any major city in any major urban area in the world, Vancouver also absorbs expenditures at the regional level for the benefit of the city and the entire region, including the operation of civic theaters (Orpheum, Vancouver Playhouse and Queen Elizabeth Theatre), major events that attract the largest crowds in the region, and other costs associated with bringing regional residents together within its borders, such as sanitation for higher foot traffic on the streets downtown shopping. The number and frequency of major protests and acts of public disobedience have also increased in Vancouver, driving up costs for policing.
But the city is also voluntarily extending its mandate to other areas.
In 2020, the city council also approved the city staff plan for 32 projects under the Climate Emergency Action Plan (CEAP), which requires $500 million over the next five years. The city intends to spend $42 million in operating costs each year and an average of $50 million per year in capital costs in its three-year capital plan ending in 2022, with additional amounts in future capital plans beyond this year.
Last year, the city council voted to kill the plan to enact mandatory parking permits for all residential streets – one of CEAP’s biggest sources of revenue. A decision could also be made in 2023, after the municipal election this fall, on road tolls in downtown Vancouver, which is by far the biggest expense under CEAP.
In December 2021, City Council approved a 6.35% increase in the portion of the 2022 property tax paid to the City of Vancouver, which represents approximately 54% of property taxes and fees for a median single-family home. The remaining 46% goes to the Provincial Government School Tax, Metro Vancouver Regional District, TransLink, BC Assessment and the Municipal Finance Authority.
During the 2022 property tax debate, City Council also gave the green light to Mayor Kennedy Stewart’s proposal to pass a new climate tax to raise $100 million over 10 years, which would help reduce the deficit. income forecast by the CEAP.
Over the next several years, City of Vancouver costs are expected to grow significantly organically, even if new initiatives and mandates are not added. City staff told city council that an average property tax increase of 9% to 10% in 2023 and an annual average of 7% for the five-year period from 2022 to 2026 are needed to cover rising costs.
Property tax is the main source of revenue for municipal governments and is intended to cover costs traditionally borne by the local level of government.