Langford begins its 2024 budget process

Last Thursday, Feb. 8, marked the beginning of the City of Langford 2024 budget process as it moves to consolidate its proposed five-year financial plan. Staff made its presentation to council whose members, as of the timing of that meeting, had not yet seen any of the information presented.

Significant proposed additions to Langford’s 2024 municipal budget include the hiring of three new RCMP officers, nine additional fire fighters, and three new Community Safety and Municipal Bylaw Enforcement staff. In fact, 20.86%, the highest item percentage of the proposed budget, will go to policing and CSMBE services. 

Some good news arising from the budget presentation? Last year, 30% of Langford’s tax dollars in 2023 stayed-ish in Langford, meaning they went into services that directly impact residents there and that was revenue not shared with other provincial entities like BC Hydro. The bad news? Over a nine-year period, Langford has used $6.8M of its General Amenity Funds to offset property taxes rather than spend those funds on traditional amenities.

Last year alone Langford directed $1.7M from those funds to property tax offsets that could otherwise have been used for purchasing or building more traditional amenities for the community. When asked by council what those traditional amenities specifically referred to, Langford’s director of finance Michael Dillibaugh said, “It’s the most flexible reserve account that we do have, though it certainly doesn't mean it can be for literally anything but it is quite broad, but more traditional amenities would be sidewalks, parks, park infrastructure, land acquisition.”  

All cities in BC collect property taxes from citizens in order to operate and address costs related to the provision of services to the community members. Property taxes are the most significant source of municipal income. Prior to last year, raising property taxes is something Langford hadn’t done in any significant way for years. 

Property taxes are going up

Langford residents are not the top property taxpayers in the CRD. The budget presentation to council showed that total residential taxes paid on a representative house in Langford in 2023 was $4,008. In Colwood it was $4,547 and in Esquimalt it was $5,140. Would-be owners of a representative house in Victoria paid $6,461 but it was Saanich residents who topped out the list at $6,800 for the CRD.

Langford’s financial plan proposes an 11.79% property tax increase in 2024. Its projected tax increases over four years are 11.19%, 7.87%, 7.99%, and 4.89%.

Tax rate increases “represent budgetary pressures associated with maintaining city service levels to keep up with population growth, inflation, and significant public safety and recreation funding requests and obligations” said the City of Langford in a release.

Municipalities have more control over Amenities Contribution Funds

The difference between property taxes and Amenities Contribution Funds are that municipalities have far more control over how they spend contributions from development projects. Contribution rates, often formulated per unit, are scheduled during zoning approval meetings and collected after builds are completed. These funds represent one of the significant revenue makers for municipalities. General Amenities Reserve Fund contributions for Langford for the year 2022 are outlined in this document.

Most municipalities can tie negotiations with developers to narrowly defined achievable goods such as seniors centres and daycares like the 5,200-square-foot child-care facility included in Focus Equities Roundhouse-Bayview Place development proposal to Victoria City Council.

Developers are typically looking for a minimum 20% pro forma in profits which of late, they are having to protect against skyrocketing interest rates and costly supply chain issues. Increasingly, they are coming to councils for concessions, arguing that they are having to revise, reduce or rescind altogether goods initially promised in agreements—such as affordable units and other amenities—just to break even. 

In fact, if municipalities want to reap the benefits of the more unfettered General Amenity Fund resources, the BC Municipalities ACT essentially forces them into this type of horse-trading with developers. Some councils are able to leverage those negotiations successfully—others either simply won’t do it or don’t do it well.

CRD municipalities, particularly Oak Bay, Saanich and Victoria, facing BC Housing Supply Act quotas have had to cultivate negotiating backbones to demand developers swallow a few percentage profit points and make good on their promises if they don’t want to lose out with constituents. Some may fear developers will simply walk away from projects leaving municipalities without sorely needed new housing units.

Surpluses are also used to offset costs

Surpluses are another source of funds municipalities can use to offset costs. For about two decades, Langford has consistently stashed roughly $200k per year in its surplus budget. Not more. Not less. 

Dillibaugh explained to council that the continued use of surplus funds to offset costs “will have a compounding effect on future budgets and present significant challenges to its sustainability.”

“It really is important,” he told council members, “that they [surplus funds] are used for one-time expenditures, not for ongoing operations for the reason is that there's a compounding effect associated with it. And there's also the risk associated with relying on the regeneration of enough funding within those reserves to cover the ongoing operations, let alone the risk or the opportunity cost effectively.”

The public will have the opportunity to provide input to Langford City Council at its Feb. 13 and Feb. 20 Committee of the Whole Meetings.