Cuts to staff, services may be needed to reduce proposed 11% tax spike, warns Port Moody councillor

This story has been amended to correct the spelling of Port Moody’s manager of financial planning Tyson Ganske.

The City of Port Moody is facing considerable budget pressure, with staff proposing an 11.33 percent tax increase to maintain existing services – more than double any increase since 2010.

The tax increases add up to an additional $311 per household on average, as the median property value in Port Moody stands at $1.33 million dollars.

A draft of the budget was presented to council on Feb. 21, with long-time members of council indicating cuts would likely have to be made to whittle the figure down.

Coun. Diana Dilworth said they have “very little wiggle room” regarding the 9.92 percent increase to city operations “other than cutting staff, cutting services, or reducing the amount of maintenance that we have on our civic facilities, our parks and our green space.”

“I just want to assure our residents that there’s not anybody sitting on city council who’s happy with the number of 11.33 percent,” Dilworth said.

Staff’s report said the spike is the result of a 6.6 percent inflation rate, increasing costs around transportation, insurance, construction, contracted and professional services, and software maintenance.

Tyson Ganske, the city’s manager of financial planning, said inflation is the highest they’ve seen in 40 years.

Five of the city’s collective agreements expired in 2021 and 2022, and higher labour costs will be incurred when negotiations conclude to help keep wages up with inflation, according to staff.

Other overhead costs are increasing due to higher costs related to the Canada Pension Plan, employment insurance, WorkSafeBC premiums, and extended health benefits.

More than four percent of the budget increase (over $2 million) is going towards higher wage and benefit costs.

Additionally, more than eight new positions were proposed, valued at nearly $900,000.

Ganske said the city is trying to match service levels of its neighbours in Coquitlam and Burnaby, without the advantage of casinos, pay parking, or levels of development revenue.

Regional factors also play into the tax increase.

Local governments are increasingly absorbing costs from higher levels of government on affordable housing, childcare, mental health, and homelessness, as less financial support is coming from provincial and federal initiatives, according to staff. 

“We’re seeing a stagnation of grant funding,” Ganske said. “We’re also looking to provide things like extreme weather shelters. And some of our staff are really becoming the frontline around some of the mental health issues in our community.”

Staff also say the city faces a “reciprocity challenge” with other cities in Metro Vancouver, where local taxpayers are essentially subsidizing regional recreation costs.

Port Moody’s Shoreline Trail, Rocky Point Parks, Old Orchard Park, Sasamat Lake, Brewers Row are popular destinations, putting pressure on local services, maintenance costs. 

“We are not generating sufficient revenues to help pay for some of these increased pressures,” said Ganske.

Recent losses of industrial tax base is also hurting Port Moody’s budget, as the city has lost $1.4 million in revenues from Burrard Thermal’s generating capacity grant in 2017, and the decommissioning of the Mill and Timber sawmill in 2021.

The city is also reinstating some services cut during austerity budgets during the pandemic.

All of these factors are having an impact on departmental resources, Ganske said.

He said in previous years they’ve used a lot of alternative funding sources such as drawing from various reserves.

While these funding sources  are finite in nature, they may not always be sustainable in the long term,” Gankse said. “And multiple years of this approach has resulted in the need to catch up, and rebuild on some of the assets in the base budget.”

While the budget expenses are offset by $2.1 million in new revenues from taxes and development permits, much of this is being put back into reserves.

Over $1.4 million, nearly 3 percent, in the proposed budget, are transfers back into reserves.

On top of this, there are also decreases in program and user fees at city facilities, lease rentals, and digital billboards and transit shelters.

Only $195,000 remains of the province’s $4.6 million COVID Restart Grant.

“We’ve really used that grant to help maintain and carry services across through the times and uncertainty of the pandemic,” Ganske said.

Port Moody residents are not the only ones facing a significant spike to property taxes, as high preliminary numbers are being seen across the Lower Mainland. 

The City of Langley is facing an 11.56 percent tax increase, White Rock is facing a 9.17 percent increase and the City of Surrey is facing a 17.5 percent tax increase, though the latter is primarily due to the police services transition

Port Moody’s increase is more than double its neighbours, however; Coquitlam’s approved budget has a 5.48 percent increase and Burnaby draft budget has a 3.99 percent increase.

“We can see from a historical context, 11.33 percent is obviously a very high number,” Ganske said. “We are seeing numbers that are quite a bit higher than we would traditionally see.”

Next steps are the public engagement period, budget presentations and deliberations between March 7 and 21, and first reading at the end of April. 

The budget deadline in the province is May 15.

Mayor Meghan Lahti described the preliminary figure as a “huge tax impact,” and anticipates council will look for ways to bring the numbers down.

“Members of this committee are very eager to make those types of suggestions, so people should come with their pencils sharpened,” Lahti said.