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COLUMN: Burnaby's wealth, and the taxing question
It's a question that always comes up at tax time and every three years when the silly season of civic election campaigning begins: If Burnaby has such a large reserve, why do my property taxes keep going up?
The short version of my response is: That's like saying people should quit their jobs and forgo their paycheques because they've got some savings in the bank.
The long version may prove somewhat more useful.
One need look only as far as the civic election ballot every three years. While in other cities, such as Vancouver, voters must regularly choose between borrowing hundreds of millions of dollars to fund roadwork, community centres and other essentials or apparently, do without, Burnaby voters, in contrast, usually have a far less dramatic, even ho-hum, decision to make—should certain city properties be designated parkland?
The fact is, Burnaby is a model of financial planning and its citizens are benefitting from decisions made 40-odd years ago.
Before then, property taxes would rise and fall like a rollercoaster whenever the city needed to buy a new fire truck or build a swimming pool.
Then around 1974, Burnaby councillor Vic Stusiak, a successful businessman in his own right, was appointed by then-mayor Tom Constable to oversee the city's finances.
After reviewing the books line by line Stusiak came to this conclusion: it didn't make sense.
In his company, he'd put money aside regularly to replace equipment when they reached the end of their useful lives. It's a strategy he helped put in place at city hall resulting in more evenly distributed tax increases from year to year.
Since then, each major piece of equipment the city owns, from cars and backhoes to garbage trucks and computers, is covered by its equipment reserve. Every time one of them is signed out by a city employee, their department pays for its operating cost, which includes a portion that goes into the reserve for its replacement one day.
Most of the value of Burnaby's capital reserves—which at the end of 2012 totalled roughly $690 million—is from the sale of land which appreciated significantly in value over the decades. The money from those land sales is required, by bylaws, to be used to buy more property to help steer future development according to the city's community plan (itself a model of patience and discipline), and to develop future parks.
There's also the density bonus fund, money the city receives from developers in exchange for being allowed to build more density, which must be used to develop community amenities in the areas being developed. And the gaming reserve, Burnaby's share of profits from the Grand Villa Casino, which council policy dictates must be used for capital projects and one-time operating costs benefiting certain aspects of the city.
While the money waits to be spent, it's invested conservatively. That investment portfolio was expected to earn $38 million in 2013, or 4.62 per cent, some of which goes to the city's operations to keep a lid on tax increases, with the rest going back into the reserves to help keep pace with inflation.
The huge pot of money also allows the city to be its own banker. Since 1998, Burnaby has been debt-free. Even before that, it started funding major projects, such as community centres and fire halls, from the reserves, and paying itself interest in the process.
Perhaps most telling about Burnaby's way of managing its money is the fact five years ago the provincial government ordered all municipalities to do essentially the same, and regularly put aside money to replace infrastructure.
It's no small irony that the left-wing Burnaby Citizens Association, which has held the majority on city council for more than 25 years, is arguably more fiscally conservative than most right-wing political parties.
Vic Stusiak himself was not a BCA member, and was known back then as a Social Credit supporter. But give the BCA credit for not messing with a good thing when they saw it.