Our CityCaucus.com cleaning staff put Raymond Louie's rosy OpEd through the de-spin cyle
On Wednesday, Councillor Raymond Louie, Chair of the City's Budget Committee published an OpEd in the Vancouver Sun titled Tough choices had to be made on the city's budget. He's right, tough choices had to be made, however, taxpayers are still waiting for them.
Now that the Vision dominated Council has voted in favour of the largest single tax increase in the history of Vancouver, we thought it was time to put Louie's bit of verbiage through the CityCaucus.com de-spin cycle. Here is a complete copy of Louie's piece with our analysis.
This year's Vancouver city budget faces unprecedented challenges. The global recession is affecting how we manage the finances at city hall. Our new council has kept its focus on the priorities we were elected on -- homelessness, public safety, and the economy -- while making some difficult decisions to put the city back on stable financial footing.
FACT: Mr. Louie says that Council made some difficult decision to keep the budget in line. If you recall, it was Vision that ran on a platform last November that tax increases would be kept to the rate of inflation which is currently pegged at about 1.5%. Are the budget trimming decisions Louie refers to include spending $88,000 tax dollars for an off-site lavish inaugural ceremony? How about Council's decision to spend $570,000 on former City Manager Judy Rogers severance package? How about Louie's decision to increase the office budgets of elected officials by almost 5% this year?
When we took office in December, the city was facing a potential 13-per-cent property tax increase due to spending decisions of the previous council.
FACT: The previous Council left Louie with a $15 million budget surplus last year. As far as the fictional 13% potential tax increase, that figure was the amount the public service annually puts out as part of their "wish list" to the politicians. In every single budget civic politicians are then expected to trim that down to a level voters can live with. In the case of Louie and Vision, they made an election commitment to raising taxes no higher than the rate of inflation...but they ended up voting for an 8% tax increase.
By February, the economic downslide was hitting our development sector, to the point that revenue from building permits dropped by almost $13 million compared to February of 2008.
FACT: The economy had started to tank well before February. As Budget Chair, Louie either ignored the headlines or was asleep at the switch. For example, one only has to look at the meeting agenda of the last six months of the Development Permit Board, who not only are reviewing far fewer projects, more than half of their meetings have been cancelled because there are no projects in the queue.
Let's not forget the public revelation that the previous council had signed the city to a completion guarantee for the Olympic village to a Wall Street hedge fund, with sky-high monthly interest payments that were threatening the city's financial capacity.
FACT: Vision continues to reference the Olympic Village in the context of the city budget. As they say in the business, this is a red herring. On page 17 of a budget report, signed off by City Manager Penny Ballem, officials state:
The Olympic Village project does not impact the 2009 Operating Budget or property taxes.
Therefore either Ms. Ballem and her staff have it wrong, or Mr. Louie is trying to hoodwink voters into somehow believing this year's budget was negatively impacted by the Olympic Village project. I'm more apt to believe Ms. Ballem's version of events on this one.
These past few months have been tough. Tight credit markets are inhibiting new development and investment. Rising unemployment means increasing demand for affordable, publicly funded city services at our libraries and community centres.
It is within this context that council is taking action to address our economic challenges head-on, and make decisions in the best interests of Vancouver's long-term economic success.
We trimmed $42 million from the city's operating budget by focusing on non-essential spending without hurting service delivery. Targeted adjustments include reductions in travel and communications budgets, as well as programs that Mayor Gregor Robertson campaigned on ending, like Project Civil City.
FACT: There was no major restructuring of city services, nor any major program cuts to speak of. The City Manager allegedly told the unions she will not be laying off any employees as part of the 2009 budget process. While their much touted hiring freeze has loopholes big enough to drive a truck through.
To say that $42 million was "trimmed" from the budget is pure fiction as most of this amount were programs and services the public service put on their wish list as part of the normal budget process.
As far as Project Civil City (PCC) goes, the current council didn't really eliminate it, they merely rebranded it. In any event, to reference the PCC office in the Op Ed as part of a major budget cutting exercise is nothing short of laughable. The total cost of the program was $300K out of the City's $1 billion dollar operating budget. One other minor fact Louie failed to mention was that before PCC was rebranded it was a catalyst for the development of 3200 new units of social housing in partnership with the Province from 2005-2008. It is one of the main reasons Mayor Robertson has been at so many social housing ribbon cutting and ground breaking ceremonies lately.
Council gave city manager Penny Ballem the authority to implement a hiring freeze -- which she did almost immediately -- providing one-time savings.
FACT: There are many so exemptions to the current hiring freeze...so you could say it's more like a hiring frost.
Council renegotiated the financing deal for the troubled Olympic village; that decision alone reduced Vancouver taxpayers' risk by an estimated $90 million by lowering interest payments that would have had a major impact on future city budgets.
FACT: Firstly, let's not forget that Councillor Louie and many of his Vision colleagues voted in favour of the very Olympic Village project he now openly criticizes to score political points. Secondly, the Olympic Village has no impact on this year's budget. See notes above.
We recently announced the first phase of our economic strategy by outlining an aggressive plan to spur investment in Vancouver through the construction of new rental housing. Council is proposing an innovative two-year plan that would see a variety of incentives -- reduced parking requirements, increased density, waived property taxes and development cost levies, expedited permit processing -- offered to developers who build new rental housing immediately.
This plan will stimulate our local economy, provide jobs for our construction sector, and address our lack of affordable housing -- in other words, an economic and housing stimulus plan that makes sense for Vancouver.
FACT: It was Mayor Robertson that put a chill on investment last Fall when he said he wanted to implement a new city tax on all vacant condominiums in the City. Now that the economy has tanked, we no longer hear about his new condo tax.
Secondly, this Mayor and Council have yet to show any leadership regarding the development of a regional economic development strategy for Metro Vancouver. That is compared to Mayor Watts in Surrey who has indicated she wants to help lead this effort.
We are continuing council's policy of shifting property taxes to provide fairness for businesses in Vancouver. Reducing the property tax burden on our small neighbourhood businesses keeps them competitive, and makes Vancouver a more desirable place to invest, start a business and hire employees.
FACT: It was Louie and his Vision colleagues that all consistently voted against the concept of a tax shift while they were in opposition. In fact, Louie was the most vocal opponent claiming that there was no evidence that a tax shift actually made any difference in the local economy.
On a side note, Louie also complained that by supporting a tax shift, the previous NPA Council was giving tax breaks to big banks, corporations and multi-nationals. We note he didn't include that bit of information in his opinion piece.
This is part of council's plan to help Vancouver through these tough economic times. Considering how hard our local businesses have been hit by the recession, now is the most important time for council to continue the business tax shift. With a brutal gang war taking place in Metro Vancouver, council is funding 96 new police officers at a cost of $16.8 million over two years. With the enormous burden the Vancouver police department has taken on by providing regional leadership on the gang war through Project Rebellion, these police officers are urgently needed.
FACT: It was the previous Council that actually approved funding for the 96 new police officers long before the current gang mayhem on Metro Vancouver streets. We note it will take at least two years before these police officers are fully recruited, trained and in their vehicles. This is hardly the quick response to the gang warfare Louie is trying to portray it as.
Our new council is being prudent. Through the re-alignment of budgetary priorities, new programs promised in last year's election by Mayor Robertson -- a detailed external audit of city spending, enhanced child care support, a mental health advocate, green neighbourhood grants -- make up just 0.08 per cent of this year's 5.83 per cent city tax increase. These are difficult times for our city's finances. Council has had to make tough choices, and there will be many more in the future.
FACT: Despite an 8% tax increase, Louie and his Vision colleagues increased property taxes to pay for provincially mandated programs such a new mental health advocate. He claims the city had to make "tough choices"...but fails to outline what those "tough choices" actually were?
Ironically, Louie's decision to hire an external auditor to cut costs, actually cost $300,000. This is the exact same amount they claim to be cutting by closing the Project Civil City office.
However, the decisions this council has made in its first four months have put the city on much firmer financial ground, and as a result, we are well-positioned to get through the economic challenges facing the world.
FACT: This Council is going to face significant budget challenges in both their 2010 and 2011 budgets unless a wholesale restructuring of city services is implemented. No decisions made in this budget have set the framework for reduced costs in the future, with the possible exception of hiring an external auditor. However, unlike an independent auditor general, they will be directed by Council and likely not have a free hand to make the necessary recommendations to keep future tax increases low.
A budget is the ultimate blueprint to help voters better understand the priorities of any government. This budget has helped to solidify that the current city government in Vancouver is not only without a plan for the local economy, it simply doesn't have a plan. What do you think?