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City faces $6-million cost crunch

Apr 06 2012

Victoria council will have to carve $6 million out of the city's operations over the next four years in order to keep property tax increases at the desired 3.25 per cent a year.

"It's going to be extremely difficult," said Mayor Dean Fortin of the budget direction councillors have given staff. "Because it means we have to do what's known as a service review - what are we doing and how do we change."

To maintain no more than a 3.25 per cent property tax lift in each of the next four years, about $1.5 million in savings will have to be found annually.

Fortin hopes the additional money won't be found simply by cutting services but that ways can be found to increase revenues as well.

But Coun. Geoff Young said achieving increased revenues could also mean a certain amount of pain. "I'm speaking as somebody who advocated parking meters operating deeper into the evening many years ago. That's the kind of thing we're going to have to look at and most of those will be just as difficult as cuts in programs," he said.

Fortin said not everything is on the table. He doesn't, for example, want to balance the city's books by raising recreation user fees.

"My biggest interest is in increasing the new assessed revenue. How do we make sure people are coming here, building and investing in commercial buildings, residential buildings that bring in new assessed revenue?" he said.

"Those are the ones that help us meet our larger goals, so we have more people, more population, more jobs, and then that starts supporting the larger vibrancy issues in the City of Victoria. So, for me, it is about fundamentally saying, How do we get increased building in the City of Victoria?"

Councillors also decided to change the mechanism used to share the tax burden between residential and business taxpayers - continuing on the path of shifting the tax burden more onto residential taxpayers from businesses.

The city will move away from the tax model it has been using, which sees Victoria businesses pay 3.59 times the property taxes that residents pay - a ratio the city has been trying to reduce to 3: 1.

Instead, councillors have agreed to follow the recommendations of Peter Adams of the Victoria Consulting Network, who suggested reducing the business share of taxes from 49.4 per cent to 48 per cent over three years.

"To me, what you're doing is you're confirming you're continuing to move taxes away from the business community or increasing taxes more slowly on the business community," Adams said.

Coun. Pam Madoff noted that there has been considerable talk by the business community about the burden of high city taxes, but not much said about the impact of skyrocketing property values on residential taxpayers.

"The people who have been calling me about this and taking an interest in moving to this direction, all they can see is a shift [in the tax burden] to residential, which is already increasing at a far greater rate than business," she said.

"If we're wanting to have vibrant businesses, they're going to need two things: They're going to need customers with disposable income and they are going to need employees who can afford to live near where they work," Madoff said.

bcleverley@timescolonist.com

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