B.C.’s financial plan under COVID-19 falls short of municipalities’ pleas

The B.C. government is providing some support for local governments but it falls well short of what Metro Vancouver mayors were asking for.

Municipal Affairs Minister Selina Robinson announced the B.C. government is addressing cash flow and revenue shortfalls by authorizing local governments to borrow, interest-free, from their existing capital reserves to help pay for operating expenses, such as employee salaries.

The measures also include delaying provincial school tax remittances until the end of the year and providing local governments greater flexibility to carry debt for an additional year.

“The COVID-19 pandemic is having significant financial impacts on all levels of government. It’s going to take hard work from both municipalities and the provincial government, but working together we will get through this,” Robinson said.

“With these new measures, we are giving local governments new tools as a first step to ease their financial burdens and that of businesses in their communities now, and as we look to recovery in the months to come.”

Vancouver Mayor Kennedy Stewart has been asking the province and federal governments for $200 million to address his worst-case scenario concerns over losses linked to the pandemic.

Stewart expressing concerns the announcement does not go far enough to save jobs and services.

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“While I want to thank Minister James and Minister Robinson for taking some initial steps to help municipalities, I do not believe they will be enough for us to avoid more layoffs and cuts to services,” Stewart said.

“New measures allowing municipalities to borrow from capital reserves will not help us fill our $110 million budget gap in the long run, as these loans need to be paid back in full. This will happen either through savings due to cuts, or property tax rate hikes, as we simply do not have access to other revenue sources such as sales tax or income tax, nor the legal ability to run deficits over the long term.”

The province is also not looking at changing the law barring local governments from running deficits.

In order to cover immediate operational budget concerns, the mayors had asked for direct grants to cover revenue losses from the closure of community centres, libraries and parking.

“UBCM will monitor the impact of these measures on the state of local governments’ finances, and work with the province to ensure that local governments have the resources to sustain their communities,” Union of B.C. Municipalities president Maja Tait said.

The province also providing support by further reducing the school property tax rate for commercial properties. The government estimating this will  provide up to $700 million in relief.

The city of Vancouver responding to the province’s announcement in a press release. The city says the COVID pandemic is creating major financial challenges with drastic reductions in revenues to run operations.

The release also noting at the April 14th city council meeting, councillors requested provincial support to provide operating grants to fund public safety and essential City services in light of a significant revenue shortfall.

“We welcome the announcement from the Province this morning, further reducing the commercial property tax rate,” General Manager of Finance, Risk, and Supply Chain Management Patrice Impey said in a press release.

“The delay of the School Tax payment in particular will be a significant help for Vancouver, and we are assessing the rest of the tax measures announced today to determine what additional tools we will have at our disposal.”

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