City of Vancouver Wants to Increase Property Tax by 9.7% in 2023

The City of Vancouver is proposing a 9.7% hike in property tax to address inflation and years of postponed spending. The figure is almost double the 5% increase proposed in November 2022 but in line with, if not a little shy of the City staff’s November 2021 forecast of a 10% increase in 2023. 

“The current environment of rising inflation has placed growing pressures and significant challenges on the City’s operational costs. Municipalities across Canada are also experiencing similar pressures and are implementing higher increases in property tax rates for 2023 than historical levels,” reads the City staff report.

They added that inflationary pressures are expected to be felt through 2023 and 2024.

The proposed increase in property tax will back much of the proposed increase for the city’s 2023 operating budget. The director of finance’s proposed $1.96 billion is 12.2% or $213 million more than last year’s operating budget.

If approved, the city’s homeowners may still see the property tax go higher or lower, depending on the assessed value of their home this year. Councilor Peter Fry says that for the average single-family home assessed at $2 million, homeowners can expect a $450 hike in taxes and fees.

On top of inflation, the city’s finances are also still recovering from the pandemic.

“We are inheriting an empty reserve fund that was depleted during COVID-19, and also an underfunding of the services that residents really value — including public safety,” Councilor Sarah Kirby-Yung said.

Called the General Stabilization Reserve Fund (GSRF), the city’s reserve fund is allotted for unexpected costs from emergencies typically brought about by extreme weather, catastrophic events, environmental hazards, extraordinary public safety situations, and economic downturns.

The fund was drained early by emergency spending earlier in the pandemic, and as of December last year, it was at negative $2.4 million, from about $150 million during the same period in 2019. The City estimates that it would take a decade to return the GSRF to healthy levels but the proposed 2023 budget designates $5.3 million to the fund, plus an additional $9.5 million with the property tax increase.

The property tax increase is driven by an infrastructure deficit that goes up to about half a billion dollars, coming from necessary spending that had been deferred, put off, or deprioritized for years because of the pandemic. 

“We haven’t been doing a very good job of infrastructure replacement in the past,” Fry said. “We see what climate change and storm surges can do — our seawall falling apart. All these pieces are really catching up with us so we need to make those investments if we really want to have a whole city.”

The proposed increase also includes topping up the Vancouver Police Department’s (VPD) budget by just over $28 million, bringing it up to $398 million in 2023. The VPD budget will cover the $8 million needed to hire 100 new additional police officers, $7.8 million for increases in fixed costs such as compensation, benefits, and vehicle fleet, $7.3 million in recruit training and restoring permanent funding mandated by the provincial government after the VPD’s successful appeal of the 2021 budget cut. It will also include $5.1 million for the third-party costs of the VPD’s non-emergency call services through E-Comm 911.

“The police have actually asked for an additional 1.7% increase on top of that. Whether the ABC majority wishes to endorse that – I’ll guess we’ll find out next week,” he said.

Fry also said the property tax increase could be higher than the originally proposed 9.7%, noting that Vancouver Fire and Rescue Services needs to hire at least 55 more firefighters but the cost for which has not been included in the proposal.

“We’ve been putting off for about four years now,” he said. “We’re seeing a fire department that’s really stretched thin.”

So far, the proposed 9.7% increase in property tax will be split into increased City services costs including the additional police officers (5%), the VPD’s permanent funding (2.7%), additional infrastructure renewal (1%), and the GSRF (1%).

The council will go over the proposed 2023 operating budget and property tax hike in a public meeting on February 28 and will make an official vote the week after on March 7.

Information for this briefing was found via City News, CTV News, Daily Hive, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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