"Paid occupancy rates of 65% or higher (annual average) are required by the accommodation sector in order to achieve economic stability in Whistler. This threshold has not been reached since 1999."
- RMOW draft long term financial plan, February 2009
Whistler council expects to adopt its 2010 budget, which includes a seven per cent increase on property taxes, next week. This is basically the budget that was agreed to last spring, when municipal staff and council put together financial plans for 2009 and 2010 in anticipation that the Olympics would make it impossible to work on a budget this spring.
While that may be good planning, it is based on the assumption that things haven't changed much. That could be a dangerous assumption.
The municipality has three main sources of revenue, property taxes, user fees and charges and hotel taxes.
Revenue from property taxes, which made up about 42 per cent of municipal revenues in 2008, has increased steadily over the years, from $26.2 million in 2003 to $33.2 million in 2008. For 2010 revenue from property taxes is expected to reach $39.7 million, although it's unclear how property assessments will go this year.
As most people know, the increase in property tax revenues is coming directly from tax increases, rather than a growing base of properties paying taxes. After years of holding tax increases to the rate of inflation they went up 5.5 per cent in 2008. Taxes were increased eight per cent in 2009 (when property assessments were frozen) and they will go up another seven per cent in 2010. The forecast is taxes will have to increase a further four per cent in 2011. That would be a 24.5 per cent increase in property taxes over four years. And, it has been suggested, that is pretty close to the absolute limit that taxpayers will tolerate.
Revenue from user fees and charges has fluctuated, from $15.8 million in 2003 to a high of $17.4 million in 2007, then down to $16.6 million in 2008, when they made up about 21 per cent of municipal revenue. Last year user fees and charges were hiked significantly, across the board. For 2010 user fees and charges are expected to total $19.45 million.
The third major source of revenue for the municipality is hotel taxes, or as they are now called, Resort Municipality Transfer Taxes (RMT). This one is going in the wrong direction. In 2007, when Whistler finally got its "financial tools," the additional 4 per cent of hotel tax, RMT revenue was $11.1 million. It climbed to $11.5 million in 2008, when RMT made up about 15 per cent of municipal revenues. It dropped to just over $10 million in 2009 and is expected to be about $9.9 million in 2010.
Anyone who has paid attention to the discounted room rates being offered for the last 10 months, or Tourism Whistler members who have looked at the forecast for hotel bookings, understands that RMT revenues are unlikely to grow in the near future. That's an issue for the accommodation sector, as Tourism Whistler chair Roger Soane told council last week. "We're getting very nervous," were his exact words.
It's also an issue for the municipality, Whistler businesses and Whistler taxpayers.
The problem for the municipality is the same problem faced by Intrawest and its mountain resorts, including Whistler Blackcomb: revenue from real estate development has dried up and learning to survive on revenue from operations (rather than growth) is a tough adjustment. The property taxes from the new residents at Cheakamus Crossing and Rainbow aren't going to come anywhere near what the municipality used to receive from development cost charges.
But growth is still occurring in some areas. Municipal labour costs are expected to increase four per cent, based on labour agreements previously arranged.
The municipality is searching for other sources of revenue - pay parking will help and the Class 1/Class 6 issue is still being pursued. However, as of November 2009 two of the three primary sources of revenue appear to be maxed out while the third is in decline.
Perhaps there will be a windfall through increases in property assessments in January. Maybe the economy will stabilize and businesses will begin hiring again. And there may be a boost in business from the Olympic afterglow. But at the moment the Resort Municipality of Whistler's financial sustainability - like many other municipalities' - is precarious and involves some tough choices. Unanticipated costs, like moving an asphalt plant or helping out a legacies society, are also possible.
So while the 2010 budget is nearly ready for adoption, there's plenty of evidence to suggest council would be better off waiting until after the Olympics before finalizing it.