Vancouver not on verge of bankruptcy: mayor

Despite media reports, Vancouver’s mayor says Vancouver is not on the verge of bankruptcy. However, he says help from the province is needed, before the city is forced to make drastic cuts to city services and programs. Travis Prasad reports.

VANCOUVER (NEWS 1130) — Vancouver Mayor Kennedy Stewart clarified Wednesday the city is not about to go bankrupt, and again called on the provincial and federal governments to provide emergency funding.

However, should restrictions related to the COVID-19 pandemic continue until the end of the year, he said the city would be forced to make some drastic decisions, including further layoffs and potentially selling off land.

“We are not on the verge of bankruptcy,” he said.

Stewart was responding to a survey commissioned by his office that outlined various scenarios should portions of residents default on 2020 property tax payments.

“I’ve always believed in laying out all the facts, good or bad, while hoping for the best and planning for the worst. And, most importantly, being transparent with residents,” he said.

The survey found 25 per cent of residents will pay less than half of their property tax bill this year, while six per cent don’t plan on paying anything at all.

That would translate to a loss of $325 million for the city, Stewart said on the weekend, combined with $189 million it is already expecting to lose in revenues from parking and other sources.

“We are not allowed to run deficits in cities,” he said Wednesday.

Stewart added the city has already taken several steps to reduce spending and make cuts to non-core services. The city has reduced spending 10 per cent overall and is on track to save $24 million through temporary layoffs, as well as $6 million in other cost savings, he said.

“These cuts have been extremely difficult to make as they affect real people.”

More layoffs and deeper cuts could follow should COVID-19 restrictions continue even until the end of summer, he said, and the city is looking to reduce spending further to balance the budget.

Stewart added the city has about $130 million in reserves, for emergencies and unforeseen costs. While staff doesn’t recommend using it all, he said the city could, if pressed.

“But even then, this wouldn’t cover the potential shortfalls in the worse case scenario of the pandemic going to the end of 2020.”

The reserve fund also doesn’t account for property tax defaults.

Stewart said for every 10 per cent of property taxes not paid, the city loses $130 million.

“If even one in four homeowners do end up defaulting on their property taxes, that would mean an additional loss of $325 million in revenues,” he added.

“We simply don’t have the reserves to deal with a half-a-billion-dollar shortfall.”

He also said any perceived budget surplus the city has is tied to development contributions and restricted to capital projects, while assets are tied up.

“It is true we have billions of dollars in assets, but the vast majority of these assets are tied up in real estate and other assets that are not easily converted to cash,” such as property occupied by affordable housing, libraries and fire halls.

He said selling such land would be short-sighted.

“Not to mention how dumb it would be to try and unload assets in the middle of one of the of the worst global downturns in the past century.”

That is why the city asked the provincial and federal governments for help.

Vancouver requested $200 million in emergency funding from the province last week to help maintain essential services and continue to support vulnerable residents during the pandemic.

Stewart asked both governments to respond to the city’s request, whether yes or no.

“Be clear, don’t leave us hanging in the middle of a crisis,” he said.

Premier John Horgan acknowledged Wednesday municipalities across B.C. are seeing a decline in revenues during the pandemic.

“I don’t dismiss Mayor Stewart’s concerns, but those concerns are echoed right across the province,” he added.

“We are still trying to figure out where we go as a province, where our regions need support, what we can ask from the federal government.”

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