Whistler's plan to overcome projected budget shortfalls totalling $5.7 million over the next three years is to raise taxes by 20 per cent, during what many are calling the worst economic period since the Great Depression.
On the face of it that sounds counterintuitive, like something concocted in a windowless office by a couple of municipal staff members desperate to find a budget solution before punching out and going home at 4:30.
But it wasn't. The plan was developed with the assistance of a steering committee of financial experts, four of whom are from outside Whistler, who looked at the RMOW's "situation." That situation includes co-hosting the Olympics next year, parameters laid out in Whistler 2020, declining capital reserves, contractual obligations to staff, and limited means of raising revenues.
Is there a better plan?
Surrey is doing something to stimulate its economy, it's promoting development through three-year tax holidays in two "economic investment zones." Development cost charges will be cut by a third and deferred, building permit fees reduced by 50 per cent, and red tape streamlined. Surrey is also investing in pre-servicing infrastructure and improving transportation. And Surrey has a $465 million capital works program planned for the next three years.
But that's not a solution that will work here. Whistler has been discouraging development/growth for some time. As the draft Long Term Financial Plan states: "Whistler has introduced a maximum size - growth cap - of 61,750 bed units. Any expansion beyond this size would undermine Whistler's efforts toward sustainability, and would compromise the unique resort experience that Whistler has worked hard to develop."
The self-imposed ceiling on development is one of Whistler's sacred cows. The issue was touched on in last fall's civic elections by mayoral candidate Kristi Wells, who called the bed unit system out dated and not reflective of reality. Which is probably true. But just talking about it raised concerns among many voters, who felt Wells might open the door to further development.
There are good reasons to maintain the cap on the type of development Whistler has seen in the last 15 years, namely that there isn't enough business to satisfy the existing hotels, restaurants and shops; adding any more through new development would only spread the business thinner.
So the fundamental question of how Whistler sustains itself after reaching buildout is now, finally, being addressed. In the middle of a recession.
We should have seen this coming. Few concepts have permeated discussions of Whistler's future more than buildout, or the bed unit cap. At times it's been the lone ray of hope for those concerned about the environment and the pace of development. It's at the heart of Whistler 2020. Yet not enough was done to prepare for this day.
As is stated in the draft Long Term Financial Plan: "For most of the last decade, robust development activity in Whistler expanded RMOW's assessment base and provided the municipality with a steady stream of new tax revenues to put towards infrastructure and program costs. Revenues from new growth during this period were sufficient to enable Whistler to meet rising service costs without adjusting property taxes beyond the Consumer Price Index for Metro Vancouver."
It was only last year, in preparation for the 2008 budget, that Whistlerites came face to face with the reality that the cost of municipal services was now greater than revenues. The result was last year's 5.5 per cent tax increase to help make up the difference. Previous councils should have confronted this reality sooner. Again, the draft Long Term Financial Plan states: "In 2007 Whistler effectively reached its growth cap. The assessed value of all new development that year was only about 20 per cent of the value in previous years."
Whistler has, of course, made efforts to pursue additional means of revenue. After many years of lobbying the province for "financial tools," in 2007 Whistler began to receive an additional 4 per cent of the hotel tax.
One of the arguments for Whistler receiving a greater share of the hotel tax was that tourists should pay for some of the infrastructure they use, rather than property owners paying for it all through their property taxes. Ironically, as Whistler has become more reliant on the hotel tax it is now decreasing as a source of revenue during the recession, and so property owners are once again being asked to pay more to help make up the difference.
Perhaps the municipality needs a wholesale restructuring of its finances. If so, that won't happen until after the Olympics. The best a blue ribbon panel could come up with, given the sacred cows and constraints of the municipality's situation, is a 20 per cent tax increase over three years. To spread it over four or five years would have meant an increase greater than 20 per cent.