Assessments 2021

Assessments are here. For those who own homes, this means a letter arrived in the mail telling you what the assessed value of your property was on July 1, 2019. It also tells you what the assessed value was over the previous three years. Some people are very upset to find their property has gone up in value, which means their property taxes are going up. Others are very upset that their assessed value has gone down, and their investment is losing value. At least, that is what I glean from Social Media, but maybe I need to get out more.

I have written before about the relationship between property assessment and property taxes, and about how the assessment process works, so this will be a bit of an update/summary of those posts. A bit of redundancy, but with new numbers.

First off, your assessment does impact your property taxes, but not as directly as you may think. The City has not passed a 2021 budget, so I do not yet know what the 2021 Property Tax rates will be, but in our last discussions, we seemed to be settling towards something like a 4.9% increase over 2020. I will round that up to 5.0% for the purposes of this discussion as long as we can all agree that is speculative and the numbers may change between now and when you get the bill.

That 5% means the amount of revenue the City will receive in property taxes from existing taxpayers will go up 5%, but it does not mean the cheque you write in July will necessarily be 5% higher than the one you wrote in 2020. First off, it only impacts the portion of property taxes that the City gets to keep. Last year, your residential Property Tax Bill looked like this:

So 58% of your property tax goes to the City, 35% to the provincial government through the School Tax, and about 7% to other agencies regulated by the provincial government. Everything else I talk about below here relates only to that to-the-City portion of the tax bill. To find out how the School Tax is set or how the BC Assessment Authority spends it’s 1%, you need to go to someone else’s blog. All this to say if the City put your municipal property taxes up by 5%, the amount of money you pay only goes up about 2.9% (that is, 5% of 58%).

If you look at your Property Assessment letter, you will note that the average change in property values in the City of New Westminster was a 3% increase. Because the City calculates its property tax rate based on this average value, a 5% increase will be based on this value. If your house went up in value by the average, then a 5% tax increase means the municipal portion of your property tax bill will go up 5%. The relationship between these two numbers is linear, so to calculate your potential increase, subtract the average value increase from your own value increase, and add the 5% increase the City is proposing:

My assessment (1940 SFD on a 5,300sqft lot in the Brow) actually went down by 11% since last year. So my Municipal taxes would go down by (-11)-(3)+5=  –9%.

My friend in Sapperton (1920 SFD on a 4,000sqft lot) saw her assessment go up by 20% over last year, so her Municipal taxes would go up by (20)-(3)+5= 22%.  Yikes.

Assessment is a dark science, and every year there are weird local effects of property values in one neighbourhood going up or down relative to others, and it is not always clear what the causes of these changes are. A recent example is the Heritage Conservation Area in Queens Park which was either going to cause housing prices to go through the roof and make the neighbourhood forever inaccessible to young families, or was going to crater the value of the houses dooming young families to inescapable debt, again depending on which Social Media account you followed. The reality is, it had little perceptible effect when compared to similar properties in Glenbrook North or the West End over the last 5 years. The market is bigger than one neighbourhood.

Properties actually sell “above assessed value” or “below assessed value”, a metric that is often used as an indicator of a market trend, since assessments are always at least 6 months old. However, it is important to remember that, in aggregate, things just don’t shift as much as they do in one-off conditions. If the person up your street who spent $50,000 on a new kitchen sells their house, they are likely to get more than the neighbour who has a black mold farm in the basement, even though both houses may look the same from the outside. Assessments are approximations of how the “typical” or median house of the size, age, and lot dimensions in your neighbourhood should be valued, not an evaluation of your wainscoting. Individual results may vary.

If you think your increase or decrease this year is unfair, there is a process to appeal your assessment, but you can’t dawdle. Local governments have to know the official assessed values by April so we can set our tax rates and get those cheery bills into the mail, so the Assessment Authority has to provide official numbers by the end of March. Therefore you only have until February 1st to file an appeal, but if you think you might want to do so, you should contact BC Assessment immediately and get the details about what you need in order to make that appeal. The important part is that the onus is on you to provide evidence that the appeal is wrong, not vice versa.

Police budget

Last week we had a Council workshop on the budget. After a couple of previous workshops, and backed up by a pile of reports on different aspects of both the Capital and Operating plans for 2021 and beyond, staff brought us a presentation with an outline of the budget they would like to bring to Council for approval. The basic asks from staff were: do you have the info you need to make this decision, and are there any significant changes you need to see before we ask you to vote on this in a subsequent meeting?

The answers were basically yes and yes.

But I’m not going to go over the budget material again here today. It has shifted a bit since I wrote these Blog posts on the Capital, Utilities, and Operational budget, and there may be some minor adjusting yet, and when the final documents get to Council for approval, I will come back to report on that.

The one part coming out of those discussions that garnered a lot of attention was a motion to freeze the Police operational budget at 2020 levels. In short, the Police budget in 2020 was $31.6 Million and the requested budget for 2021 was $33.3 Million, an increase of $1.73 Million, or about 5.5%. As I have written about in earlier discussions of the Operational budget, some of this is a baked in increase due to inflation and annual wage increases, some of it is “enhancements”, which are new costs related to new programs or changes in how the department operates. It is also a little more complicated because some of these costs (about $650K) are anticipated to be offset by new non-property-tax revenue, as some of the activities the Police Department does are revenue-generating.

The requested “enhancements” for 2021 were pretty modest, $90,000 for a new Temporary Full Time position to hire someone to coordinate the Diversity Equity, Inclusion, and Anti-Racism (“DIEAR”) plan that arose from the recent Police Board Motion on these issues, and $44,000 to pay for increased PPE and Naloxone, which apparently used to be funded by the provincial government, but is no longer. In Council’s discussion of these enhancements, it was questioned whether the DIEAR work should be under the Police budget or the City’s HR budget (as the City is undergoing similar work and the two streams really need to be aligned). No-one opposed the spending on Naloxone, though I may lament that the Province should not be downloading this cost on to local governments.

Again, it is worth reviewing again what I wrote about in the summer. The Police Act makes a clear distinction between the roles of City Council and the Police Board. Council is not meant to oversee the operations of police, but are required to approve a budget for police. The budget is first put together by the Police Board (well, in reality, put together by the police department and approved by the Police Board, much like how City staff put together the City budget and ask Council to approve it) then brought to Council to be included in our budget. As a Council, we have essentially no say in how the Police spend the budget they are provided. Though there is some reporting every year of operational details from Police, and we do have occasional (maybe once a year?) Council-Police Board meetings, from a numbers point of view this is the level of detail that City Council gets when asked to approve a police budget:

We also go through the requests for additions to the Capital budget. The police service Capital budget request for 2021 was this, which mostly represents replacement of heavily used equipment as it approaches end-of-life:

The discussion at Council about these requests was mostly around when the best time to shift the types and number of vehicles we purchase in order to achieve our larger Climate Action goals. Police fleets as they exist are a real trouble spot for de-carbonizing our vehicle operations, as electric or even plug-in Hybrid vehicles essentially don’t exist in North American police fleets (Google low-emissions Police vehicles, and the majority of hits are from the UK, for some strange reason that is taking me way off track here…). In the end, Council voted to support all of the $1.3M in Police Capital requests, so the rest of the conversation here is the about operational budget.


During budget deliberations over the last few weeks, there has been more scrutiny of the Police Budget than I remember in previous years. Of course, this is in context of the larger conversation around North America about policing, about the impacts our model of policing disproportionally has on Black and (in Canada especially) Indigenous people and on populations made vulnerable by the overlapping crises of a poisoned drug supply, a failing mental health system, and increasing economic disparity as we endure a fourth decade of this grand neo-liberalism experiment. I hear the calls for change, and the questioning if the Police are the right organization to be at the front line addressing these crises in our community. The center of those discussions was the idea of shifting resources from policing to other ways to address the community impacts of these crises.

When the motion came forward to freeze the NWPD operation budget at 2020 levels, the motion did not come out of “Left Field”, but was a natural extension of the conversation the community (not just in New Westminster) has been having over the last year, and was written in the undercurrent of our budget deliberations over the last month. During the spirited Council debate on the issue, I was compelled by the strength of the arguments for making this move at this time, and I thank my Council colleagues for that (As always, I don’t want to speak on their behalf, you can watch the video yourself is you want to follow the tenor of the conversations).

If we agree (and I do) that we need a different model to address the impacts of addiction, mental health, and poverty in our community, that the status quo needs to change, then this is one of the few places where we, as a City Council, can force that change. So much of the increases in City budgets in recent years has been finding other ways to help with these problems in our community, even when those things are outside of our jurisdiction – we are spending the money because someone has to. We are helping provide community-based health care in our support of the Umbrella Co-op, we are helping reduce homelessness in supporting the Rent Bank, we are helping reduce the impact of the poisoned drug supply with funding of Naloxone for our fire department and in working with Fraser Health to establish safe consumption sites in the City. So much of the emphasis of our COVID response was in assuring the most vulnerable in our community have access to the supports they need – because we know they are going to feel the impacts of COVID the most. Emergency shelter, food security, seniors outreach, access to washrooms and hygene for unhoused people, the list goes on. As do the demands. This is what we need to fund to be a just and safe community for all.

So when asked “what are you going to do instead”, those are the beginning of the answers. We also need to be holding the new Provincial Government’s feet to the fire about the downloading aspects of expecting local governments to fund these things, and we need to keep pushing for the legislative changes needed to help the most vulnerable in our community. They are moving in the right direction, but it simply isn’t fast enough, and it is not clear to me that they are really committed to spending the money that needs to be spent.

This is hard. This is not a decision made lightly, or for unthoughtful reasons. It is also difficult to have conversations about these issues because so much of the public rhetoric about policing and police reform is polarized and lacking in both civics and civility. But I’m hopeful we can have a respectful and productive conversation between Council, the Police Board, and the Province about where we go from here. The idea that New Westminster could go from having an truly innovative police service (and we do) to having a transformational approach to policing, to even be a “pilot city” for new approaches at a time when the Province is talking about changes to the Police Act, is an opportunity I think we should embrace.

Budget 2021 – part 3

We had another budget workshop last week, and I’m sorry I’m so late getting to writing about it, but the usual level of chaos in my life was amped up a bit by too many meetings this week, including a chance to Fan-Boy on the two best “City beat” reporters in BC.

In the November 23rd workshop, Council took a first review of the Operating Budget. This is the money we spend day to day in the operations of the City. Not the buildings and equipment we use, but the staff in those buildings and the fuel for that equipment. And this is the budget that relates directly to the tax rate calculation for next year. One of the complicating factors in how we assess “the budget” is that we really have more than one. I have already talked about the Capital Budget and I already talked about Utilities, so I am going to ignore both of those as much as I can and talk just about Operations here.

The math form the 2020 budget looks like this:

So about 70% of our revenue in the general Operations Fund (aside from utility rates) comes from your property taxes. We also make money selling services (like concession stand hot dogs, swimming fees, and parking), a bit from senior government grants, more from “contributions” (casino money, etc.), and “Other” (which includes license fees, permitting fees, fines, interest on savings, an such). You can see the departmental breakdown of where the money is spent (in this case, shown without utility spending), and the breakdown of what we spend the money on (about 50% paying people, 35% buying stuff, 15% on financial stuff like amortization and interest).

2020 was (no surprise) a challenging year. Revenues fell short by almost $4 Million in sales of services (recreation fees, Anvil events, parking), an equal amount in lost Casino revenue, and about $1 million in other revenues. We also had significant operation savings, especially in staff costs related to not having to hire auxiliary staff to provide those suspended services like recreation classes, reduced training costs and suspensions of hiring at the peak of the Pandemic. We also had some unexpected costs related to the Pier Park fire and operating the Emergency Operations Centre for Pandemic response. The emergency Pandemic support money provided by the Province and Federal Government definitely helped and it looks like we are going to be in ok financial shape at the end of the year. We got through.

That said, we are not home and dry. To quote Ford Prefect, “We could not even be said to be home and vigorously toweling ourselves off.” The Pandemic is still here, and is still impacting our function and our finances. This makes modelling for 2021 difficult. We don’t know when revenues will come back, and certainly expenses are going to come back faster. We have to make some assumptions, and have to be conservative about those to keep ourselves from getting into financial trouble. We are assuming that $5 million of casino revenues are not coming back next year, that recreation programs and other sales of service will still be curtailed to the tune of $1.8M, and that we will be spending $550,000 on COVID response programs.

Once we set that as a baseline, we can project the “fixed” cost increases in the City related to already negotiated annual salary increases and inflation, which will be about $2.1 Million above 2020, and that our Capital Program as currently envisioned (mostly, that we break ground on the CGP replacement) will cause about $1.6 Million in debt financing costs. Staff have identified about $1 Million in operational efficiencies or savings, and have identified $3 Million in potential budget “enhancements” (new stuff we could do, or new staff we may need to meet the strategic goals set out be Council). Put that together, you end up with about a 6.3% tax increase in 2021. Yes, Council asked for  lot of stuff over the last year.

If we don’t want the tax increase to be that big, we need to cut some stuff from the budget, which is what most of the conversation from this point forward will be about. We spent some of the workshop discussion various “enhancements” and hearing reports from staff about their departmental operations and pressures that would either support or not those “enhancements”. When we get back together on December 7th, staff will have hopefully worked through those comments and come back with a draft budget that we can then start adjusting.

So all that to say, there is a *lot* of information in the public reports about the budget you can read here, and lots of it was related in the public meeting the video of which you can see here, and we have some work to do.

Budget 2021 – part 2

I wrote a bit about last week’s Council Workshop on the Capital Budget a few days ago, complete with some ugly pies. This post I am going to write about the second half of that presentation – the draft utility budgets for 2021.

As I have mentioned before, the City has more than one budget. The General Fund is all of the stuff we do to provide general City services, from parks and recreation to police and fire services to fixing potholes and supporting arts. The General Fund has a few funding sources including senior government contributions and fees related to permits or parking or fitness classes, but the bulk of it comes from property taxes. In that sense, it is the big fund that Council has close-to-unlimited authority to spend on providing a suite of services.

The Utility Funds are different, and are accounted differently. Outside of occasional senior government grant programs, all of what you pay for water, sewer, or solid waste, goes directly to paying to provide those services. No property tax is used to pay for providing those services, and paying for those services does not offset property taxes. (I am purposely putting our Electrical Utility aside, because it is unique in New West, as I’ve talked about before).

Utility rates are going up faster than property taxes. This is not because of Council largesse or pet projects, but because the cost of delivering these services is going up. To be more accurate, the cost for delivering these services *sustainably* is going up. More on that below.

I did some posts a couple of years ago that used a type of flow diagram to show what happens to the money you spend on your water, sewer, and solid waste bills. The numbers have gotten a little larger, but the proportions have stayed about the same, so the diagrams are still useful even if I don’t have the time or energy to update them right now.

Keep in mind that like all of our budgeting, the law tells us to create a 5-year budget plan. We update this plan every year, so even though we are currently looking to approve 2021-2025 budgets, we are really only approving the 2021 rate increases. The future rate increases are projected in order to inform our planning, but the rate increases in 2022 and beyond are really up to the discretion of future Councils. With that in mind, here is where we see the budgets going.

Water
We foresee collecting just under $15 Million in water fees this year, compared to $13.7M in last year’s budget. That is about a 10% increase. Part of that will come from selling more water (the City is growing), and the rest from a 7% increase in water rates. Here’s where the money is projected to go:

Water is the money we pay Metro Vancouver for the water in the pipes. Operations is the cost of running the utility day to day (staff, materials, power, water quality testing, etc.). Capital is the cost of replacing or building new pipes, valves, meters, hydrants, and all the hard parts that keep water flowing. Transfers are the exchange of money between the Water Utility and the General budget of the City. The “City” buys water from the Utility to run city hall, arenas, the pools, watering flowers, etc. At the same time, the Water Utility uses City equipment and personnel to do some of their work – from billing to road crews, and because the Utility by law must be separate from the General fund, these transfers must be accounted for. Every year, the Utility uses a little more City services than it collects from us in water charges. Finally, Reserves are the money the Utility puts aside in a reserve fund for a variety of purposes, which I will talk about below.

Sewers
We foresee collecting just over $24 Million in sewer fees this year, compared to about $22.5 Million in 2020. That is about a 7% increase. We are also projecting to collect another $3.6 Million in DCC money and capital grants (I talk about how that works here). That will predominantly come from a 7% increase in sewer rates. Here is where we expect that money to go:

With the same categories as water above (instead of paying for water, we are charged by volume by Metro Vancouver for the treatment of our waste water), you can see it is a little different. We are budgeting for a much bigger capital expenditure in 2021 for sewers, and we are actually going to dip a bit into our reserves to pay for that – which is why I put the blue box with the arrow above the line there to show the offset of costs from dipping into reserves.

Solid Waste
We foresee collecting $3.74M in users fees this year, compared to $3.35 Million last year (we also collect other revenue of a little under a million dollars in this utility) the utility rate increase works out to about 12%. Here’s where the money is projected to go:

You can see the solid waste utility works different that water and sewer. Though the per-tonne “tipping cost” of depositing waste at Metro Vancouver and private facilities is significant and going up, there is much more operational and transfer costs than other utilities. This is because of the nature of the work – we have collection trucks running 5 days a week that need crews and fuel. Also unique here is the fact we are running with a deficit in our reserves for solid waste, which will hopefully turn around by 2022, and this is not unrelated to why the rates are increasing so much.


I want to wrap this up by talking about our reserves. This is the money that each of these utilities have “in the bank” (well, Solid Waste has a deficit in the bank, but follow me here). We often talk about the main reason our utility rates are going up is because the cost of operating them is going up, but that is only partly true. We are also raising rates to build up our reserves.

The reason we have reserves is because they work like a buffer on the system. If we have an unexpected cost like extensive emergency repairs, a catastrophic loss, or have an opportunity to get a big matching fund grant from senior government that requires we are able to pay our half, a healthy reserve gives us that flexibility. Healthy reserves make our utilities *sustainable*. Currently, our reserves are in the order of 2-3% of the value of our assets. With increased awareness of the infrastructure gap so many communities are suffering, the current best practice is to keep reserves between 5% and 10% of the asset value. For this reason, we are continuing to build reserves in each of our Utility funds with an aim to get to that level.

This was a conversation we had in the workshop, and part of our finance staff’s work plan is to do a thorough analysis of our reserves situation as the City’s Asset Management plan is updated.

Overall, a typical household in New West can expect to see their annual utility rates for water, sewer, and solid waste go up by $132 next year, or about $11 more dollars a month.

Budget 2021 – part 1

This week Council had a Workshop instead of a Council meeting. We have these intermittently to dig deeper into subjects than we have time to in a regular meeting. It also allows us to have more of a free-form conversation with staff than the strict structures of a Council meeting. This gives staff a chance to educate Council a bit on the inner workings of their departments, and gives Council a chance to provide more direct feedback. In the end, we usually give staff some “direction” for future work – somewhere between vague ideas and strict orders. This direction should, as best as possible, be reflected in the reports staff eventually bring back to Council for approval, which is sometimes a challenge as Council workshops are 7 people speaking and often providing contradictory direction. Such is the life of a senior management for a city.

The workshop this week (you can watch the video here) was our first discussion of the 2021 Budget, with both some preliminary Capital Budget work and some discussion of Utility Rates. I have written previously about the difference between the City’s Capital Budget and Operational Budget, and have also written about how Utilities are different the General Operations. Damn, I’ve written a lot of stuff about budgets over the years. Here we go again.

Like the rest of our budgeting, we do our Capital budgeting as a 5-year plan. That makes this conversation about framing a 2021-2025 Capital Plan, but 5-year plans are updated every year, so our emphasis is on the planned 2021 capital expenditure. Still, we project into 2022-2025.

I would continue to describe our capital plan as “ambitious”, because we are planning to invest significantly in capital in the next few years. This is in part due to a few of big-ticket items (e.g. the Canada Games Pool replacement and Massey Theatre refit) and partly because some of our strategic goals and climate action plans will require capital outlay in the next couple of years. The budget I talk about here is very much a draft, and will certainly change, but the first pass includes $202 Million in capital spending in 2021. Yikes.

For comparison, our previous 2020-2024 capital plan approved last year was for $475M over 5 years, front-loaded to include $135M in 2020. This brings up the first thing we need to talk about with Capital budgets: we rarely spend all of our capital plan in any given year. Most years I have been on Council, we have had an annual capital plans in the order of about $90M in the current budget year, and $60M in each of the subsequent 4 years. However, usually about $30M of that $90 million doesn’t get done in that year. This is because projects are delayed, because other priorities come up, partnership money doesn’t materialize in time, or any of numerous factors. For whatever reason, about a third of “this year” in the Capital Budget commonly sgets pushed forward into “next year”. Meaning next years capital budget will go from the forecast of $60M to $90M, and the cycle repeats.

2020 was obviously a unique year. It started off that way because our Capital Budget had expanded due to Council priorities and we anticipated about $135M in budgeted capital delivery in 2020. The Pandemic response caused that to go off the rails early in the year, and although we did/will deliver something like $50M in capital works, that means $85M in approved capital works have been pushed forward into 2021 Add to this the $117M in 2021 capital plan works (most of which was already in the 2020-2024 5-year plan) and you get $202M. Realistically, we will deliver about $142M of this and push $60M into 2022.

**It is probably worth pointing out again, I am using rough estimate numbers here. The bills for 2020 have not all come in yet, as the year isn’t over, and we have not settled on what the Capital Budget will look like as a Council yet. I am just relating the very-draft numbers we used to guide our deliberations in the workshop. None of this is fixed in certainty yet.**

In the report provided to Council there was a big spreadsheet that set out all of the planned capital expenditures as 500+ line items, from $2,000 for scheduled replacement of Emergency Radio batteries to $84,000,000 for the Canada Games Pool replacement. And yes, we went through them line-by line and have asked staff questions about many of them. We will be asking more questions line-by line, and many of those lines are going to change.

In the workshop, we went though various ways to “clump” this capital spending to make the big number relatable and better set priorities. The first big division is by “fund”. We have a General Fund that is all the stuff you pay for ostensibly through property taxes (parks, police, fire, roads, planning, bylaws, council, etc.) and we have Utility funds that are paid for through users fees (Electrical, Water, Sewer, and Solid Waste). That breaks down like this:

Putting aside the Utility Funds for a bit (until next post), we can break down the General Fund in various ways, be it through the function or departments where the capital will be spent:

Or through the types of things we are paying for with the capital funds (and here is where the clumping gets a  little more subjective – you may clump a little differently than me):

As we went through in the workshop, these can be further clumped by how much is spent on each Council Priority (this one clumps the utility capital in with the general fund capital, because Council Priorities end up in both):

Any way you slice it, $200M is a lot of pie. As you can see in all of these, the $84M for the replacement for the Canada Games Pool is the biggest item, by far. It is currently shown as a 2021 expense, and we will likely be making a decision on whether to commit that funding in 2021, but the actual bill is not likely to be paid all in one chunk in 2021. $84M in one year looks big, but in reality it will stretch out over a couple of years as we take money out of reserves and issue debt to pay the construction bills.

As we went through the spreadsheets at the workshop, different Councilors emphasized different priorities, and asked for more details on several lines. I suspect (and I am speaking only as one of 7 members of Council here, not on behalf of anyone else) I think this list will be whittled down a bit, and that there is no way we will have the operational capacity to get all of this capital work done in one year. The real numbers will become more apparent in December after some significant back-and-forth between Capital and Operational budgets.

Next time, I’ll talk a bit about the preliminary Utility Budgets and what we can (or can’t) do about ever-increasing utility rates.

Budget Survey


The City’s Budget is something everyone has an opinion on, even those who don’t think of it in that way. When people say “the City should fix the sidewalks”, “do more about homelessness”, “get back to the basics” or “extend the Hume Pool season”, they are making comments about the budget. However, few discussions around services put budget at the centre of the item, except at the time of the year when the Council is asked to set a tax rate for the year ahead.

We have always asked people to comment on the budget, and every year there is a public report and Opportunity to be Heard on the final budget decisions (always framed around “next year’s tax increase”), but this is commonly after all of the heavy lifting of putting the budget together has happened, and the details of how we got there are not transparent enough for meaningful input.

The result of this, as I have previously joked, is that the community spends 11 months asking the City (and Council) to do more things, then spends a month telling us to not raise taxes to fund those things. Local governments really aren’t able to operate at deficits, so this form of feedback is not particularly useful for guiding policy. Part of that is because much of how the City’s budget works is arcane, and we need to change this.

One effort the City has undertaken in the last couple of years has been to try to make our budgeting process less arcane. Followers of this Blog (hi Mom!) know this is an interest of mine – I spend probably more time than is useful talking about taxes and busting some of the myths about how New Westminster taxes compare to our cohort. Past of that effort was my own research to better understand how our budget works so I can make more informed decisions about it. Thing is, Municipal finance is a complicated thing.

This was identified a few years ago as an area where the City should improve its Public Engagement efforts, and over the last couple of budget cycles we have been changing how we ask for input to the budget. Doing it sooner, adding an education component to guide more useful feedback, and trying to get a more diverse group of residents and stakeholders involved in the conversation.

We are at the beginning phases of the 2021 budget process. It starts around now and works towards a final budget being prepared in early May. This is obviously a different year than most, as both our revenues and our expenses were very different than we projected prior to the pandemic. Rectifying that in our 2021 budget, and understanding how to project forward with an uncertain pandemic recovery is going to be a challenge. However, we are still ramping up our public engagement on this topic. If you are the kind of person who read this far into this blog, you probably are the kind of person who has feedback to the City on the budget process.

Here is what you can do:

Go to the city’s Budget Engagement website. There you will see links to background information you may want. You will also find links to:

Watch the webinar and/or read the power point deck, again to provide a bit more background, and to hear a Q&A session with residents asking questions you may have had.

Most importantly, fill out the survey! There is a relatively quick survey to get your initial feedback about how the City should prioritize spending in the year ahead, and to see how the public feels about that services/costs balance that the City is always trying to manage.

As I mentioned above, the City is really trying to get a wider variety of feedback on this stuff. I know there are a few people out there who fill out every public engagement opportunity the City has (sit down, Brad!), but I am hoping those of you who are reluctant to spend 5 minutes on an online survey will take the time, or that you vocal types will, after filling it out yourself, pass this on to some other people in your household or social circle to add diversity to the voices we hear from. The survey is open until October 18th, so this is a great family Thanksgiving activity!

a follow-up

In my last post, I tried to give some data on how policing works in BC and New Westminster, and I tried to do so without opining, recognizing that my own biases and opinions probably sneak in all over everything I write.

There was one asterisked statement in that post I wanted to follow up on, because it relied on a more detailed reading of the Police Act, and that post was long enough without this extra 1,000-word digression. However, in the day or two since I started sketching out that previous post, there has been much news, including the Mayor of Vancouver saying he really can’t do much about policing costs, some in the chattering class suggesting that was artless dodging, and the Solicitor General and Premier saying the Police Act is due for an update. All of the sudden, that asterisked point became the center of debate, so I will try to unpack a bit here.

Again, by means of caveat: I am not a lawyer or specialist in interpreting legal documents. I am not on the Police Board, so operating under the Police Act is not part of my day-to-day. I may get details wrong here, and please correct me if I do.

The Police Act says that a municipality over 5,000 residents must pay for policing. At first blush, that means City Council is responsible for approving the Police Budget (both operational and their capital requests) as part of their annual budget work, and we do that. However, that is not the entire story.

Section 15 of the Police Act says:

…a municipality …must bear the expenses necessary to generally maintain law and order in the municipality and must provide, in accordance with this Act, the regulations and the director’s standards, policing and law enforcement in the municipality with a police force or police department of sufficient numbers to adequately enforce municipal bylaws, the criminal law and the laws of British Columbia, and to maintain law and order in the municipality, adequate accommodation, equipment and supplies for the operations of and use by the police force or police department

This makes clear that the Provincial Government has ultimate authority to determine the level to which police are funded in BC. Section 17 of the Act follows up by saying the Director of Police Services (a Provincial Government employee appointed by the Solicitor General, see Section 39 of the Police Act) must notify the City they are in breach and direct them to fix it. If they fail to do so, the Solicitor General can fix it, and send the municipality the bill.

Section 26 also puts policing costs at the foot of the Police Board:

Subject to a collective agreement as defined in the Labour Relations Code, the chief constable and every constable and employee of a municipal police department must be employees of the municipal police board, provided with the accommodation, equipment and supplies the municipal police board considers necessary for his or her duties and functions, and paid the remuneration the municipal police board determines.

Then Section 27 lays out the slightly-convoluted response if the Council refuses to pay for something the Police Board asks. The Board or Council may appeal to the Director (that Provincial government employee), who determines “whether the item or amount should be included in the budget”, and reports back, cc’ing the Solicitor General. If ordered so, the Council must include the item in its budget, or be in violation of the Police Act. Naturally, a lot rides on that should above, but ultimately, the Solicitor General holds all the cards in this dispute.

The grey ares in the middle of all this is the determination of what “sufficient numbers” and “adequate” are in the sections above. How does one measure if the level of service planned by the Police Board and funded by the Council is sufficient? Or more to the point, how would one know when it is insufficient?

This brings us to Regulations, which are pieces of Legislation that exist under Acts. Again, not a lawyer here, but Acts are high level documents enacted by the Legislature that set out general principles and duties, establishing the will of the Government. Regulations are subordinate to and empowered by Acts, but include a lot of the fuzzy details that often need adjustment without opening up the entire big Act. A probably-wrong but simplified example: an Act would say “driving above a speed limit is illegal”, where the subordinate Regulation would say “Speed limits on urban roads is 50km/h unless otherwise designated”.

In Section 74, the Police Act gives the “Lieutenant Governor in Council” (a fancy way to say, the government of the day) the power to create Regulations on various aspects of the Act, including:

prescribing the minimum salary or other remuneration and allowances to be paid to members of police forces, police departments, designated policing units or designated law enforcement units” and “prescribing the minimum number of members of police forces, police departments and designated policing units that are to be employed on a basis of population, area or property assessment, on any combination of them, or on another basis

To the best of my knowledge, these regulations do not actually exist (a list of regulations that do exist under the Police Act is available here). Police staff numbers and police remuneration are determined by the Board, the latter approved by the Council, and Regulations just don’t come into it. There is, however, a legal ability for the provincial government to create such regulations if needed to clarify the funding required for “adequate” policing. Short those regulations, if a dispute occurred and persisted, it would likely end up in the Courts and a judge would decide, though my (unskilled) reading of the Act suggests it would be the Police Board whose opinion carries the most weight.

In in my time on Council in New Westminster, there has never been a significant conflict between the Board and Council on the budget. Council has, on several occasions, reviewed budget augmentation requests made by the Police as part of our annual budgeting process and sent some back for review. This type of negotiation has always resulted in agreed-upon operational budget and Capital requests, much like in other departments in the City from Engineering to Parks.

Yes, a Municipal Council could push back hard against a Police budget and significantly reduce it. Yes, the Police Board could appeal to the provincial government if they feel this reduction would not allow them to discharge their duty under the Police Act to “enforce municipal bylaws, the criminal law and the laws of British Columbia; maintain law and order in the municipality; and prevent crime”. Then the ball would firmly be in the provincial government’s court to determine the path forward – accept that Council’s reductions or order the Council to pay. No doubt, Politics would ensue.

Where we are at

When I see voices being raised here in New Westminster and across North America to call attention to inequity society, most prominently the unjust policing of Black and Indigenous people, I struggle to find the place where my words are important. For the most part, they aren’t. As I have spent my life being a tacit beneficiary of this injustice, my lived experience is not something anyone needs to hear from right now. There are better voices to listen to now on this topic. For now, my admittedly inadequate response is to say I am listening, and I am having conversations with people in the community to better understand what kind of concrete actions I can take in my elected role or support others doing to start addressing the systemic change we need to see. I appreciate the correspondence (even the form letters!) I have received, and am struggling to be timely in my replies, but I’m working on it.

I have often tried to use this blog to unpack arcane bits of municipal government. Maybe my usefulness here is in outlining the lay of the land. Not as call for action, an excuse for a lack of action, or a retort against calls for radical change, but more to inform and empower those who would want to call on government to take concrete actions, and those who have concerns about those calls. I think data can help ideas find better traction in local government, in provincial government, and in police forces. So the following is intentionally short on opinion, but I hope this provides local context to the conversations happening across North America right now.


New Westminster has a Municipal police force. Where many communities in British Columbia contract out local policing to the RCMP, here in New Westminster the police are independent. The legislation that empowers them to act as a law enforcement body is the provincial Police Act, which requires that a Municipality provide policing, whether through a stand-alone police force or contracting the RCMP. It also requires that a non-RCMP municipality establishes a Police Board to oversee that policing.

The New Westminster Police Board is (as regulated by the Police Act) chaired by the Mayor of the City, and one of the positions on the Police board can be appointed by the City Council (city councilors are strictly forbidden from serving on the Police Board). The five other members of the Board are appointed by the provincial government via the Solicitor General’s office. So there is a little bit of overlap of jurisdictions, but it is clear the Police do not answer to City Council, for good separation-of-powers reasons. The Police Board oversees (but doesn’t direct) operations, provides guidance on strategic planning, and even hires the Chief constable. These Board members are, notably, unpaid volunteers, and tenure is limited to two three-year terms.

In requiring a municipal government to provide policing, the Police Act requires that a City Council approve a policing budget. Without digging too deep into the current rhetoric, only the provincial government (through the Police Act) or the Police Board can reform the police; while only the City Council can defund them*. Of course, more complicated responses to the complex issues raised by the current public discourse would rely on some sort of concerted action between all three bodies. In short, the systems are structured such that fundamental changes to the status quo will be hard to make, and it is challenging to think about where to start. But that is the challenge before us.

*within certain limits. See my follow-up blog post


I do want to talk about funding – because the part that is (mostly) under City Council control, and it is something that has become fodder for much of the recent discussion about policing in local government circles.

The intrepid CBC Local Government reporter and data geek Justin McElroy put some data together here comparing “protective services” spending across BC municipalities. As he notes, comparing across municipalities is difficult because not all are as transparent about how their spending is broken down. The one definitive source is the BC Government stats collected annually, but they report “protective services” as one category which lumps together Police and Fire. Looking at the 2018 data (the most recent available on-line), on average 25% of local government spending is on Protective Services. New Westminster is a little lower than that average at 23%.

(source: Schedule 402 2018)

This proportion varies widely across the province for many reasons. Victoria has high protective service costs at least partly because it is a small municipality in the middle of a large metro area with some special policing costs related to being the Provincial Capital. Salmo has a small volunteer fire department and limited policing provided by the RCMP, so their protective services costs are really low. There are also great variations on the denominator side of the equation, as different Municipalities have different utility costs and other levels of service in non-protective services. So, all that to say direct comparisons are complicated.

I can talk with a little more certainty about New Westminster’s spending on police services. If you look at our most recent on-line financial reporting here, you can check the 2020 Budget column to see what we plan to spend this fiscal year:

This is cut from page 19 of the pdf in the link above. This is the “Operational” part of the budget, which pays for day-to-day expenses like salaries, gas for police cars, electricity and paper clips. Utilities like sewers and electric are handled separately in the same report because the sources of those funds are different. In 2020 the City budgets to spend $136M on non-utility operations, and $31.6M of that is police operations. It is fair and accurate to say that 23% of our non-utility operational spending in the 2020 budget is on Police operations.

There is a second budget category the City uses to account for its “Capital” expenses. This covers all of the tangible objects the City has to buy that have a useful life span (i.e. are not consumables) but need maintenance or periodic replacement, like buildings, cars, roads, ice plants for arenas and lawnmowers. On pages 25 and 26  of that linked pdf above are the details of what we plan for Capital spending for the 5 years covering 2020-2024. It totals up to a substantial $275M, but if you take all the lines that are for Police services, you see $427,600 for police building repairs & renovations, $828,600 on general equipment and $2,085,000 on police vehicle renewal and repair for a total of $3.3M, which totaled up works out to a little more than 1% of our 5-year capital budget. Savings on equipment is relatively easy, but that is a small proportion of the city budget.

Finally, it is timely to discuss how the local police services budget has changed in the City. The City doesn’t archive old financial plans on the website, and the Provincial stats lump all “protective services” together. However, I do have copies of all of the annual budgets I have been asked to approve since I joined City Council in 2014, and can project forward to 2024 using the current 5-year financial plan (which are projections that may change). Here is what the Police Services portion of the general operations budget looks like over that time. It has remained around 22%-23% of the budget over that time, but is increasing at a slightly higher rate than overall budget:

We can talk about reasons why the police budget has changed over the years, and yes I have opinions, but maybe I’ll leave that for future discussions I am sure we will be having.

Ask Pat: DCC, MFA, WTF?

This is not a real “Ask Pat”, but I was recently shown this Facebook Post, and I asked the author if I could answer it at length on my blog. I think it provides a good opportunity to open up a bit of how municipal financing works, from my decidedly non-expert-but-required-to-learn-enough-to-make-decisions viewpoint, and (in a roundabout way) asks what I think is a fundamental question about financing municipal infrastructure.

So here’s a question I’ve been pondering for a while about the housing crisis. I’m not sure exactly when the Local Government Act was amended to change the way municipalities generate revenues to cover the cost of infrastructure to support growth. The current method is called Development Cost Charges (DCC’s).

In conversations with a retired city controller I learned that up to the implementation of DCC’s cities would issue Municipal Bonds to generate the funds needed to cover these costs, build the infrastructure and then taxpayers would collectively pay for the costs through tax payments. In the early 70’s the Province created the Municipal Finance Authority to streamline this process so that hundreds of small communities didn’t have to be floating bonds to generate their infrastructure capital they now have expertise and experience at the MFA.

All this changed with the enactment of provisions in the Local Government Act for DCC’s which are essentially prepaid taxes paid to municipalities to cover the costs of roads, sewer and water installations and parks associated with the new development whether that’s an addition to your house or a 50 storey condo development.

OK so what? Well now the purchase price of that newly developed housing unit comes preloaded with tens of thousands of dollars of prepaid taxes. For arguments sake let’s use $50K as a nice round number, please bear with me for this illustration. So your purchase price includes this $50K, which by the way the developer probably has to finance plus any profit margin the developer might add and so additional costs, but lets work with $50K for now. At 5% mortgage interest that increases monthly payments by about $290 and adds over $37,000 in additional interest to the mortgage. With me so far? Now let’s add property transfer taxes and these days for a lot of people government mandated mortgage insurance as well.
So we’ve transitioned away from publically financed infrastructure growth to growth financed by individual families. What used to be money borrowed at preferential interest rates through government Bonds is now financed by homeowners through their local BANKS, the same ones that continue to report record quarterly profits year after year after year.

So what about the cities. Well since 2008 Canadian Municipalities collectively have managed to sock away over $100BILLION IN CASH while continuing to press Federal and Provincial Governments for cash to help them cover the costs of their suppossed infrastructure deficits. It seems to me that while its easy to blame ‘foreign investors and speculators’, at least some of this crisis needs to be laid at the feet of our governments at every level.

My first impression is that this discussion conflates a couple of things, and that is leading to a bit of confusion. Here is my understanding of the relationship between DCCs, Municipal Bonds, and the MFA.

The idea behind DCCs is to charge the capital cost of infrastructure expansion to the persons who benefit from that expansion. DCCs are charged when there is growth in residential density (a 3-story building becomes a tower, a house becomes a set of townhouses), and are meant to assure that a fair share of the cost of building bigger sewer pipes, bigger water pipes, buying new parks space, etc. is covered by the new population that fills that density. The City charges a DCC based on the square footage of the new density, and presumably the developer passes that cost onto the purchaser of the property, who is the ultimate beneficiary of the new infrastructure. In New West, we have DCC Bylaws for Transportation, Water Supply, Sanitary Sewer, Drainage, and Parks.

At current rates, a new 1,000 sq ft apartment in Downtown New Westminster would include about $5,140 in DCCs. That would be $1,120 for Transportation, $60 for drainage, $250 for water, $430 for sanitary sewers, and $3,290 for Parks. Note than a brand new 1,000 square foot apartment in New Westminster sells for something over $700,000. If you believe that the cost of new housing is directly correlated to the cost of building it, then DCCs can be said to raise the cost of any single unit by much less than 1%. Although they cumulatively do a lot to reduce the cost of infrastructure upgrades for current residents, I don’t think DCCs are a significant cause of the current housing affordability crisis.

It is important to note DCC money is not thrown into general revenue, but is put into specific reserve funds and earmarked for defined projects under the category for which they are collected. This is fundamental to the DCC regulation – they must be spent on improving infrastructure above and beyond what would have been spent if the density was not permitted.

For obvious reasons, DCC money is not spent the day it is collected. A City is a complicated thing, and we cannot upgrade a section of sewer on a whim. Instead, we need to plan out years, sometimes decades, in advance so that all parts of the system work together. When collected, DCC money mostly goes into a reserve fund and is drawn out when the works happen. Sometimes we can borrow against a reserve fund (if the sewer needs to be upgraded today, but a DCC has not been collected yet and we are confident it will be collected in the near future), but even that is a bit deeper than we need to go here.

DCCs also don’t pay for all infrastructure upgrades. Even if there was no density increase in a City, we would have to replace your water lines every 50 years or so, pave your road every 10 years or so, etc. That money comes from property taxes (in the case of roads and parks) or part of your water/sewer bill (in the case of the pipes). We collect a little more in your water bill than it costs us to run the water system, and set that aside into those same reserves to pay for maintenance and upgrades of the system when they are needed. Alternately, we can pay for the upgrades when they come up by borrowing money, and charge future users that cost (plus interest). As you will see, we do a little of both based on what makes the most financial sense at the time.

That is how we can have both $120 Million in our reserves and $65 Million in debt. I hate using household finances as a model for explaining municipal finance (they are two very different things), but this is similar to having money in an RESP account at the same time as holding mortgage debt: we do it for rational reasons related to how the financial and taxation systems are designed. We didn’t invent global capitalism, but we operate within it. If you have an alternative system that more fairly distributes capital, send me your e-mail and I’ll subscribe to your newsletter!

This does raise what I think is the fundamental question about how we finance public infrastructure. If we want to build, say, a new $100 Million recreation complex, do we save up enough money to pay for it before we build it, or do we build it on debt and pay it off over time? There are compromises to both.

In the first case, everyone pays today into a reserve fund until we hit the number that we need to build the complex. It will take several years, and for all that time, the taxpayers of the City will be paying into the fund but not receiving the benefit of those payments until some point in the future when the complex is completed (if they still live in the City at that time). Is that fair to them?

In the second case, the complex gets built first, and the people who have an opportunity to benefit from that complex pay taxes for it while it is being used. Of course, they have to pay a little more this way because the debt needs to be serviced over the period of time it takes to pay it off. Is that fiscally prudent?

(It sounds to me like you would prefer more of the latter in the case of financing infrastructure related to new growth, as it would result in the City borrowing more from the MFA or Municipal Bonds and spreading the cost evenly among all taxpayers, whereas the former puts more burden on the new home purchaser which they would, presumably, borrow from a bank to finance. Please correct me if I got your argument wrong.)

There are other factors that need to be considered, and this is why most local governments do some combination of both. It matters what interest rate a local gov’t can earn on its reserves vs. what interest they pay servicing the debt. In this low-interest era, we may choose differently than back in the high-interest 70s. These rates are also related to your financial status: a City with $100 Million in the bank can get a lower rate than a City with $100 Million in debt. There are also significant complications local governments have to go through to borrow beyond their 5-year financial plan. Add to this uncertainties like inflation of construction cost and other capital needs that may pop up in the same time period. The practicality is that we sometimes need debt, and we benefit from strong reserves. 

I don’t want to get into the discussion here about us going to senior governments with hats in hand asking for their help in funding public infrastructure (this blog post is already much too long). However, I can summarize by saying local governments are responsible for the maintenance and upkeep of about 60% of public infrastructure in Canada, and we directly receive about 8% of all tax revenues. Without help from senior governments, little of your public infrastructure would be sustainable. The Infrastructure Gap commonly measured across Canada to be more than a hundred billion dollars is measured above our existing reserves; but I digress.

The Municipal Finance Authority is, essentially, a Credit Union. Local Governments can borrow money from the MFA at rates better than we can get from commercial banks, and we can save our reserves with the MFA and receive a pretty good return. Most years, New West makes a little more in interest on our reserves than we spend in interest on our debt (though market fluctuations obviously impact this equation). As you note, the MFA structure has largely replaced Municipal Bonds issued by individual Local Governments. In essence, the MFA issues Bonds on behalf of all its member Local Governments. I am really not an expert on this part of finance, but I would assume that the reason we use the MFA instead of issuing our own Bonds is that the interest rates the MFA can offer (because they are a large, diverse organization) is much lower than we would have to pay to make the Bonds attractive in this razor-thin investment market.

But perhaps more to the point, the Bonds vs. MFA issue is something completely separate from the DCC discussion. DCCs are taxation – they generate revenue for a Local Government. Bonds are simply debt instruments; they are loans which we would have to generate revenue (taxes) to pay back. This takes us right back to the fundamental question that we have already asked – when should a government collect the money to pay for new infrastructure? Before it is built, or after? In reality, we do a little of both, and use the financial instruments available to us under the Local Government Act to hopefully strike a fair and responsible balance between the needs of today and the needs of tomorrow.