Vancouver Mayor Kennedy Stewart is blasting the B.C. government for shortchanging the province’s biggest cities, including his, in the distribution of COVID-19 recovery funds.
The city is already looking at cuts, including possible layoffs, as well as the largest drawdown in recent memory from reserve funds to make up for a $60 million revenue shortfall in the 2021 budget. But on Wednesday, Stewart told city council he was shocked to learn the city’s finances are under even more pressure than previously thought; while they had anticipated almost $60 million of COVID-19 relief, instead they’ll only receive $16.3 million.
The funding in question is part of the $19 billion “Safe Restart Agreement,” a federal government investment unveiled in July , which provided, among other things, operational funding for municipalities whose finances have been battered by the pandemic. The funding was designed to flow from Ottawa to the provincial and territorial governments, who would then distribute it to local governments.
When that funding was announced in July, Stewart welcomed it, telling Postmedia News he was glad to see the fruits of months of advocacy to the feds from him and other members of the Big City Mayors Caucus.
B.C. would receive more than $2 billion, some of which was earmarked for municipal funding, which would be a 50-50 cost share with the province. In July, Stewart applauded the governments of both Prime Minister Justin Trudeau and B.C. Premier John Horgan, and said he looked forward to seeing the details of how the funding would land on the ground.
“Some people said this advocacy was a waste of time, but this is what happens when you fight for the cities you love and don’t give up,” Stewart told Postmedia in July. “This unprecedented $19 billion framework shows the power of local governments working in partnership with the federal and provincial governments, and I want to thank Prime Minister Trudeau and Premier Horgan for recognizing that the only way we can fully recover is if cities have the resources they need to deliver the services people count on.”
But on Wednesday morning, the mayor struck a starkly different tone.
“I’m really pretty gobsmacked about getting shafted over this,” Stewart told council.
Vancouver’s chief financial officer, Patrice Impey, had just explained to council, during a presentation on the 2021 budget, that instead of the funds being distributed to B.C.’s local governments on a straight per capita basis, the city learned this week that the province used a formula “which really favoured smaller municipalities over larger municipalities.”
As an example, Impey told council, while Vancouver, with a population of about 630,000, received $16 million, a small city of 45,000 would receive over $5 million — more than four times Vancouver’s per capita funding.
Impey also explained to council that Canada’s big cities were hit particularly hard during the pandemic, because big cities tend to rely more on user fees — everything from parking revenues and permit fees — that were particularly constrained by COVID-19 restrictions.
Smaller municipalities depend more on property taxes, which only make up about half of Vancouver’s revenues. And property tax defaults, as Postmedia recently reported , haven’t been as bad as initially feared in the early days of the pandemic.
B.C.’s bigger cities, Stewart said Wednesday, are shouldering the heaviest burdens on challenges like homelessness and the drug overdose crisis, and “the intention of the federal funding was to help out the cities with the most need, but that’s not what happened here today.”
“Basically, the province decided to renege on the federal agreement, and to not distribute the money as agreed,” Stewart said. “This is extremely to the detriment of B.C.’s biggest cities, including Vancouver, Surrey and Burnaby.
“This money would have never come to the province if it wasn’t for the big city mayors negotiating it, and now they’ve decided to take it away from the big cities where it’s needed the most and spread it to small municipalities that aren’t having the same struggles.”
The city was already looking at staff reductions across departments, along with a five per cent property tax increase and a deep dive into reserve funds , to balance next year’s budget.
But now, with the recovery funding falling far short of expectations, the city will be forced to make even tougher decisions and possibly deeper cuts when they finalize the 2021 budget next month, Stewart told Postmedia by phone after Wednesday’s council meeting.
Stewart thanked and credited Trudeau’s federal government for answering the call for help from Canada’s big cities by making this funding available in July, and placed the blame squarely on Horgan and his provincial government for the way they’re distributing the money.
The written agreements between the federal government and the provinces specified how funding should be distributed to municipalities on a per capita basis, Stewart said, which happened elsewhere.
“(Alberta Premier) Jason Kenney honoured the agreement, and (Ontario Premier) Doug Ford did,” Stewart said. “But in his wisdom, the (B.C.) premier decided to punish the big municipalities that are hit the hardest, and give the greatest award to Anmore, Belcarra, Lion’s Bay, West Vancouver, small municipalities, many of whom have the wealthiest residents.”
B.C. Municipal Affairs Minister Selina Robinson wasn’t available Wednesday for an interview but in an emailed statement said the relief funding was designed to be equitable and help all of B.C.’s 188 local governments, in communities big and small.
“The funding formula provides more money to larger communities, but a higher per capita level of funding to smaller- and mid-sized communities because we know that smaller municipalities generally do not have reserves to draw on like larger municipalities and many small communities, especially tourism-dependent ones, have less diverse revenue bases that have been hit hard by COVID-19,” Robinson said.
Robinson said Vancouver has also benefited from her government providing $644 million to cover TransLink’s losses, and funding hundreds of temporary spaces and hotel purchases to house the homeless.
But Stewart, a former federal NDP MP, made clear his “great displeasure” with the B.C. NDP.
“This is a terrible way to start a new majority government,” he said.