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Construction slowdown led to city's shrinking revenues

The global financial crunch that left yawning holes where high-rise towers were meant to rise in downtown Vancouver also helped to blow a hole in the city's budget, sending development permit revenues tumbling to a projected $12.5-million this year from $25-million in 2008.

And with no sure knowledge of when the construction tap will turn back on, the city is scrutinizing everything from cleaning crews to parking lots in an effort to bridge a $60-million shortfall in its nearly $1-billion budget.

"The credit crunch is still very alive and real for them [developers]" city manager Penny Ballem told reporters yesterday at City Hall. "Things are still slowed down, and we don't have a sense of when that is going to pick up."

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Recent months have seen an increase in small construction projects, she added, but fees from that activity are not enough to offset the downturn in fees from major projects.

About two-thirds of the city's revenues comes from taxes, with the rest from fees, including development permits.

As city revenues shrank, wage hikes from a 2007 settlement were kicking in, federal and provincial governments were cutting their budgets, pinching some city programs, and bills for projects - including the Woodward's redevelopment - were coming due.

Projected salary increases make up the biggest chunk - $26-million - of the $60-million shortfall. Higher costs for debt, rent and to operate facilities like the renovated Woodward's and a new emergency communications centre account for another $19-million. The remaining $15-million is chalked up to a one-time savings in this year's budget.

The shortfall, if shifted to taxpayers, would require an 11-per-cent tax hike, an option that Vancouver Mayor Gregor Robertson has said is not on the table.

The "Vancouver Services Review" is an attempt to find savings in city operations, including police, park and library board budgets.

The first phase of the review identified $10-million in cost savings and will eliminate 58 full-time jobs in 2010.

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The city can save significant amounts of money through consolidating services, Dr. Ballem said, citing examples such as the city's three carpentry shops and multiple warehouses.

Between now and December, when the city will complete its budget, the review team will look for more potential savings in the hopes of staving off tax hikes.

Dr. Ballem would not speculate on user fees or reduced hours for libraries or other city-run facilities, saying such decisions have not been made yet.

In a later briefing to reporters, Mr. Robertson said the spending review was overdue and that "everything will be on the table."

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About the Author
National correspondent

Based in Vancouver, Wendy Stueck has covered technology and business and now reports on British Columbia issues including natural resources, aboriginal issues and urban affairs. More

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