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City eyes service cuts to limit tax increases

Mar 07 2012

Victoria will have to make millions of dollars in service cuts in coming years to keep future tax increases below four per cent, city councillors were told Tuesday.

This year, city staff are recommending paring back on programs covering everything from adding new bus shelters and more street lighting to maintaining park benches and trails in order to find $1.2 million in savings to keep the municipal tax increase at 3.5 per cent - down from the earlier anticipated 4.65 per cent.

But Brenda Warner, the director of finance, said the city's financial picture is worsening and a permanent reduction in services of between $5 million and $11 million is necessary in order to maintain future tax increases at the 3.5 per cent a year level.

City staff are suggesting $950,000 in cuts to ongoing capital programs and a $500,000 reduction in transfers to capital reserves this year to reduce the magnitude of the tax increase on the $194-million operating budget.

While the city was able to reduce capital programs this year, Warner said, continued cuts to capital programs are not sustainable and could ultimately result in safety, risk or liability issues.

"This is a short-term fix. We have to be clear that cutting capital spending does erode the foundations of the city," Warner said.

The city has little wiggle room when it comes to holding taxes down. Already agreed-to salary increases equate to a two per cent a year tax increase. Parking revenues are down $494,155 from what was anticipated, and other departmental revenue shortfalls - including $144,828 from the conference centre - totalled $476,483. Revenue from new assessment is estimated at only $500,000.

Several councillors said they did not like areas being proposed for cuts. Coun. Shellie Gudgeon wondered whether rather than paring back on capital programs, savings couldn't be found in management salaries.

"You're cutting off your nose to spite your face. We're not going to increase investment in the city if we don't enhance the livability of our streets and neighbourhoods," she said

Coun. Geoff Young said there didn't seem to be much appetite around the council table last week to review the city's generous grant and tax exemption programs. But cutting grants may not look as unpalatable when compared with the long-term capital program cuts being proposed, he said. "I think we need to have a serious review of a whole lot of our grant programs," Young said.

Mayor Dean Fortin said the budget objective should be to follow staff recommendations for this year and then look at that as a starting point to move forward on both growing the economy and finding savings in service levels.

"My fundamental concern is as you keep cutting more and more services, you start having your city go into that downward spiral," said Fortin. "So before we start cutting services, we need to know what the impact is and know that it's not short-sighted," he said.


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