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What you need to know about COVID-19: October 20, 2020
Property taxes are slowly trickling into some municipal coffers, but are expected to be paid in full despite the economic uppercut from the COVID-19 pandemic.
Some B.C. municipalities delayed the due date for property taxes by three months to the end of September to give property owners facing financial difficulty more time to pay. Other municipalities left the usual July due date but delayed when penalties kick in until Oct. 1.
Some municipalities kept the July due date and staggered their penalty dates over several months.
In Coquitlam, where the city extended the deadline until Sept. 30, 58 per cent of the $274 million in property taxes owed has been paid.
In Vancouver, which also put off the deadline until Sept. 30, nearly 70 per cent of the total property tax bill of $1.67 billion has been collected.
In Richmond, where the due date was kept to the beginning of July but the penalty date was delayed until Oct. 1, collection is at 73 per cent of $418 million property tax owed.
In the three cases the amount is up 20 to 30 per cent from that collected in early July, when Metro Vancouver did a survey of its municipalities. That survey is intended to be updated in October.
Outside of Metro Vancouver, Kamloops has seen 90 per cent of its $167 million in property taxes collected.
At the time of the Metro Vancouver survey in early July, those communities that had kept the July deadline and included at least a small penalty for not paying on time, saw a significantly higher collection rate. For example, the District of North Vancouver, which included a July 3 penalty date, had already collected 86 per cent of its total property tax owed.
Michelle Hunt, Coquitlam’s general manager of finance who is also vice-chair of Metro Vancouver’s finance advisory committee, said initially there was a belief the pandemic would cause a significant amount of property tax delinquency but it does not appear that will happen.
She noted that even though the percentage of property taxes that has been paid in Coquitlam to date seems low, it is on par for how much would be paid normally before a deadline hits. Many people pay just before the deadline in any year, said Hunt.
“We are not expecting at this point to see huge delinquency in terms of people actually not paying, but it remains to be seen obviously,” said Hunt.
A bigger concern is the so-called variable revenues that municipalities receive, which include parking fees and fines, recreation fees, transit fares and casino revenues shared by the province.
Parking fees and fines for a city such as Vancouver can be a significant revenue source, as much as $80 million or about five per cent of its operating budget.
Casinos continue to be shut since March because of the COVID-19 pandemic, so there are no revenues flowing to the province to be shared.
Coquitlam expects to face about a $5 million operating budget shortfall next year and expects it may have to cut spending on capital projects, which has longer-term implications for a community, noted Hunt.
Like other communities, Coquitlam has already made workforce adjustments to reduce its costs.
Vancouver, the largest community in B.C. with the biggest operating and capital budget, has also had to cut staffing levels and services. It is facing a $120-million operating budget shortfall this year and recently voted to cut its five-year capital plan by more than $220 million.
“We’ve been worried all along. That’s why we extended the deadline to pay,” said Vancouver city councillor Adriane Carr. “But we really do expect the vast, vast majority will pay by the end of the month.”
The federal and B.C. governments are providing assistance to municipalities because of the pandemic, as much as $540 million to support local government operations, according to the Union of B.C. Municipalities.
The funding is welcome, municipalities say, but not expected to meet shortfalls for local governments whose operating budgets in B.C. totalled more than $8.6 billion in 2018 and have risen since.
Municipalities face difficult choices in raising tax rates and/or cutting services in trying to balance their budgets, says Tom Davidoff, a professor in the Sauder School of Business at the University of B.C.
He believes it would make sense for the federal and provincial governments to use their borrowing power to help local governments.
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Copyright Postmedia Network Inc., 2020