The municipality’s 2008 budget shortfall is not a one-year problem.
That was the take home message from Tuesday night’s community dialogue meeting, which saw more than 20 people from all levels of the community voicing their concerns and discussing potential solutions.
“There will be a cumulative shortfall in budget over next few years if we stick to a tax rate based on rate of inflation,” said Diane Mombourquette, the municipality’s general manager of economic viability.
Mayor Ken Melamed even went as far as to say that a tax increase is needed to “protect our resort from catastrophic failure.”
“Part of me has to say, I don’t know how the community expects us to maintain a successful resort and continue to do these cuts (to the budget). To cut $5 million out of the budget, I don’t know what people are thinking,” said Melamed.
“The municipality is getting good value for its money. We built the number one resort. I don’t know where the money is supposed to get dropped out of here.”
If council approved a budget based on a tax increase tied to the 2.1 per cent rate of inflation, the community would feel the pinch.=
It could lead to the Meadow Park Sports Centre closing for a day, the library cutting back its hours of operations, grass left untended and roads possibly not being paved, explained the mayor.
This explanation comes after several calls from community members to keep the 2008 budget tied to inflation.
During the meeting, Fiona Famulak read a letter on behalf of the Chamber of Commerce, stating that the board of the Chamber believes an appropriate starting point for community discussion on the budget is the creation of an “alternate budget” or one funded by a property tax increase based on the rate of inflation.
Later she agreed that the tax increase does not have to stick to the rate of inflation.
However she stressed that the community needs to understand what would happen to Whistler if property taxes were not increased.
“I think we need to start from that point, and let people understand how bad things can get if we go there,” said Famulak.
The letter asked council to begin focusing on what changes are required for the 2009 budgeting process to make sure it is community-wide, consultative, and iterative.
The proposed tax increase is a significant departure from Whistler’s status quo of increasing property taxes based on the rate of inflation.
Staff drafted the preliminary six per cent property tax increase, which was approved by council in November to mitigate a $3.8 million budget shortfall.
One of the main factors for this year’s budget shortfall is the provincial government’s recent change to the Class 1/6 strata hotel classification. The estimated loss is between $1.8 million and $2.5 million or roughly seven to ten per cent of the total tax revenue.
Compounding this hit are rising labour costs. Wage increases have outpaced general inflation rates recently and, as more people begin to leave the workforce than enter it that trend is not likely to be reversed any time soon.
A change in Whistler utilities operations – specifically the new waste transfer station and the new composting facility – along with limited future growth and increasing RCMP costs are also budget considerations.
“This budget has nothing to do with inflation,” said the mayor.
“We’re not dealing with inflation. I am challenged to understand what the logic is to say 2.1 per cent.”
Community member Scott Pass said the community wants to understand the rational behind the decisions to go with a property tax increase.
“We need to understand what you made your decisions on,” said Pass.
Council recognized the need for more communication with the public. At the same time, the public has never taken any interest in the budget up until this year.
A six per cent tax reduces the impact by $1.5 million, leaving a budget shortfall of $2.3 million.
The municipality will meet the rest of the shortfall by lowering its contribution to capital reserves, which also means less capital spending. The goal of a 20 per cent contribution to reserves will drop to a 13 per cent contribution in 2008.
To balance the budget and keep business as usual for 2008 would mean a 14 per cent tax increase.
The budget draft bylaw will go to Council on March 3. The public will have one month prior to the meeting to review the draft online. The final budget will then be adopted by Apr. 7.
-With files from Alison Taylor