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Possible $12 million revenue drop catches Vancouver by surprise

Unexpected revenue shortfalls in Vancouver could send property taxes soaring even higher than city financial staff had first predicted.

Now the city is looking at across the board hiring freezes and cutting programs enacted by the previous government in an attempt to tone down taxes.

City councillors were informed this weekend that revenue from service and inspection fees over the last two months were down to the tune of 50 per cent from historical levels.

The city’s director of budget services, Annette Klein, said the change has been on the development side of the equation.

With developers hesitant to build and construction slowing down, the fees paid to the city for permits and building inspections appear to be far below expectations.

(The city budgeted $33 million in service and inspection fee revenue in 2008 and $30 million for 2009, a figure that doesn’t include the latest numbers.)

If the trend continues through 2009, that would result in an unexpected loss of $10-12 million, which represents a 2 per cent tax increase on its own.

That means that despite the city having already trimmed the budget forecast by $26 million since mid-December, residential taxpayers could still be facing an extraordinary 10.3 per cent tax increase this year, including a planned residential-to-business tax shift and the revenue shortfall.

“That is absolutely unacceptable,” said Coun. Raymond Louie, whose left-of-centre Vision Vancouver party controls council.

The city’s top bureaucrat, city manager Penny Ballem, has been instructed to consider hiring freezes and pay freezes in trimming the fat.

It’s expected programs enacted by the previous Non-Partisan Association council, like the $300,000 a year “civil city” office, will face scrutiny.

For details, see this post on my blog.

Irwin Loy reports for 24 Hours and is a regular contributor to The Hook.

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