City of Vancouver must cut tens of millions from budget

By Cheryl Chan, The ProvinceSeptember 28, 2009 8:04 PM

The City of Vancouver is facing a $60-million shortfall in 2010 due to plunging revenues and a weak economy.The projected budget gap did not come as a surprise, said Coun. Raymond Louie, chair of the city's finance committee. “We knew that the economic downturn would have a detrimental impact on our budget,” said Louie. “We anticipated that if things were to continue the way they are, that we would have a $60-million shortfall.” City manager Penny Ballem said the shortfall is due to historically-low city revenues, continuing weakness in the economy, federal and provincial government cuts, the implementation of the new harmonized sales tax, new city facilities set to open, and wage hikes put in place in 2007.

A sizable chunk of the revenue drop comes from a drastic decrease in development permit fees - expected to be halved from $25-million in 2008 to $12-million this year, said Louie. Revenue from permit fees ranging from tree-pruning to renovation permits has also been down due to the general slowdown in the economy. In anticipation of the shortfall, the city - which is not allowed to run a deficit - initiated an organization-wide service review in February to find ways to save money.

The Vancouver Services Review has already made four cost-cutting recommendations, including implementing shared services in areas such as finance, IT and supply chain management; improving processes in payroll, capital planning and budgeting; and consolidating services to avoid duplication. These measures are expected to save the city $10-million for 2010 and about $29-million in 2012, said Louie. Ballem said there will be impacts on city staffing levels over the next three years, but said they’ll be mitigated by attrition and retirement. The city’s current hiring freeze and reduction in the use of consultants, travel and training will be maintained in 2010, said Louie.

Where the remaining $50-million needed to close the gap will come from, however, still needs to be addressed. “We’re still working on those details at the present time,” said Louie. “But it was important to put out the figures so people understand the gravity of the situation.