What happened: A new Research Co. survey found that 25% of Vancouver home owners said that they will pay less than half of their 2020 property tax bills, with 6% planning to pay nothing.
Why this matters: This drop in revenue would blow a hole in the City of Vancouver's budget and could prompt the city to cut back on services it provides.
Vancouver Mayor Kennedy Stewart on April 12 warned that city coffers could run low, prompting painful cuts to services unless other levels of government help pick up the slack. The city has already laid off around 1,500 of its more than 7,000 employees.
"Local governments will be forced to take drastic measures that will hurt residents and businesses, and significantly slow any post-pandemic economic recovery," Stewart said in a statement.
“It’s illegal for Vancouver and other local governments to run deficits, so the only way we can stay afloat is with the help of the federal and provincial governments."
Stewart last week asked the province for financial help. One way that it could provide that would be to lend home owners money so they can pay their property taxes.
Stewart's fears about the city's finances were stoked by an online survey that his office had Vancouver's Research Co. conduct.
That survey revealed that 46% of those living in the city have either lost their jobs or experienced a reduction in hours. This has led to half of all households reporting an overall decrease in income, including 24% that have experienced a significant decrease in income.
“The research is clear," Stewart said. "The city’s finances are going to be negatively affected by COVID-19 due to lost revenues and hard-hit homeowners defaulting on their property taxes.”
Only 68% of home owners said they could pay their full mortgage payment last month, and only 55% said that they will be able to do the same in May. On property tax, 25% said they will pay less than half of their 2020 tax bills, with six percent planning to pay nothing, according to the Research Co. survey.
Renters' plight appears to be nearly as bad. Only 70% of renters said that they managed to pay their full rent in April, and only 63% said that they expect that they will be able to pay their full rent in May.
In December, Vancouver city council approved the city’s 2020 budget and five-year financial plan, including a $1.6 billion operating budget and a $502 million capital budget for new projects in 2020.
The City of Vancouver had already anticipated that the COVID-19 crisis could prompt it to suffer up to $189 million in losses this year due to shortfalls in revenues and fees. Stewart called the survey "alarming" and said that the data points to a coming crisis for the city’s own finances.
“If 25% of homeowners do end up defaulting on their property taxes, we could shed up to an additional $325 million in revenues,” he said. “Losing more than half-a-billion dollars in operating funds in 2020 would devastate the city’s financial position, forcing us to liquify assets and exhaust every reserve fund we have – just to avoid insolvency.”