The saga of balancing Whistler’s 2008 budget came to an end Monday night when council approved a five-year financial plan based on a 5.5 per cent property tax increase for this year.
And one clear impression from Monday’s meeting was the municipality has entered a new era of budgeting — with revenue more closely tied to the local business climate than ever before.
“The municipality’s revenue will flow more in the peaks and valleys of the business cycle,” said Lisa Landry, manager of fiscal planning for the municipality.
“What that means is our revenue is going to be more variable…. This is a new thing. This was not seen in the past.”
From now on, hotel occupancy rates will acutely affect municipal revenues.
In fact according to Landry, occupancy rates will have a larger impact on the budget than building new properties and increasing the property tax base.
Specifically, total property taxes generated from the new Cheakamus Crossing neighbourhood, delivered in 2010, will only be in the neighbourhood of $200,000 annually, further confirmation the municipality can no longer rely on growth to fund itself.
Tying the municipal budget more closely to the local business climate is a result of recent changes in strata hotel assessments and the province’s revenue sharing agreement.
Several councillors also made reference to this new era of municipal budgeting at Monday’s council meeting, drawing from the fact that the 5.5 per cent property tax increase is a significant departure from the municipality’s status quo of keeping to the rate of inflation.
“The community, going forward, is going to be very different from the one we have built to this point,” said Councillor Eckhard Zeidler.
“People should probably have it in their mind that if they come and they are looking for an increase in services, we are going to find that money in one of two places: tax increases or cutting something else. That is the new reality that I think we all have to get into our heads.”
And Councillor Bob Lorriman added that council learned many lessons as it broke new ground this year with the budgeting process.
“I think we need to continue to embrace the community and explain some of the challenges that we are up against,” said Lorriman.
“I think we have done a good job this year. I think we can do better next year.”
Not all councillors were satisfied by the budget outcome.
Councillor Ralph Forsyth voted against the five-year financial plan, saying that not enough was done to look at ways to balance the budget beyond cutting costs and increasing taxes.
“I don’t think we’ve had a full enough dialogue about the ‘third way’, and what we are going to do to move forward,” said Forsyth.
“The pattern we are going down of cutting is not sustainable. We just can’t continue raising taxes, and we just can’t keep cutting programs.”
The budgeting process began last September and over the months saw several consultations with the public as council strived to mitigate a $3.8 million shortfall. Originally, a 14 per cent tax increase was forecast to makeup the budget shortfall, assuming no cuts in spending and typical annual increases in department budgets.
“A lot of work has been done,” said Mayor Ken Melamed about this year’s budgeting process. “It has been a grueling process and very challenging times for the municipality.”
One of the biggest ways the municipality cut costs in 2008 was by reducing contributions to capital reserves. In 2007, the municipality committed 17.8 per cent; this year that was down to 11.3 per cent.
Landry said this drop is of some concern to the municipality, with many wondering if enough is being put away to keep infrastructure maintained properly.
Community member John Sinclair also voiced concerns about this drop in contributions, calling on council to “please be very diligent and restrictive of your spending.”
However, municipal surveys have shown that when faced with a budget shortfall, most taxpayers prefer to reduce spending on capital projects.
This year’s budget shortfall is not a one-year problem. Even with the 5.5 per cent property tax increase this year, a $1.3 million deficit is predicted for 2009 and 2010, rising to $3.1 million in 2011 and $4.1 million in 2012.
To begin working on addressing this long-term shortfall, the municipality will contract economist Ford Frick to prepare an “economic sustainability report.” The report is to be completed in 2008, though the terms of reference for the project have not yet been finalized.