The Langford Budget: There are No Solutions, Only Trade-offs

 

Image Generated with Google Gemini

I don’t often shift to this perspective on this blog, but today I am putting on my hat as a Langford City Councillor. The financial trade-offs currently before the City are a real-world application of the economic principles we evaluate in the classroom: opportunity costs, unfunded liabilities, and the "Trolley Problem" of governance.

As a Councillor, I am often asked why our tax increases seem high in percentage terms. To answer that, we have to look past the "sticker shock" of a percentage and look at the values reflected in our budget.

The Context: A Small Number vs. A Big Reality

It is important to acknowledge that a 15% increase on a small tax base looks very different than a 5% increase on a large one.

The Math: A 5% increase on a $100 bill is $5. A 15% increase on a $20 bill is only $3. While the percentage is three times higher, the actual dollar magnitude is lower.

I developed a Comparative Tax Tool to provide people with data sourced directly from the Province of BC (Schedule 704). Even with recent increases, Langford remains one of the most affordable municipalities in the CRD and the province. We are an outlier in percentage change because, for decades, Langford artificially kept rates low by effectively borrowing from our future.

From Legacy Subsidies to Community Equity

For years, Langford’s reputation was maintained through a specific set of fiscal maneuvers: selling off public land and using developer amenity funds to subsidize general operations.

In economic terms, this was a legacy subsidy. By liquidating collective assets (land owned by everyone) to keep property taxes artificially low, the city provided a direct financial transfer to established property owners, disproportionately benefiting those with the largest assets.

We have been moving away from a system that prioritized a select few at the expense of our city’s future. As a newer resident myself, I am acutely aware of the cost of this transition. Many of us are now paying to correct a system we didn't create, fixing an physical and social infrastructure deficit that was left to us as a "parting gift" from a previous era.

This transition is about fairness across generations. Instead of liquidating public assets to grant a 'discount' to those who have been here the longest, we have been choosing to build a city that works for everyone. I recognize this comes with a significant cost today, one that I am paying alongside you. But the reality is simple: we either pay the true cost of our city today, or we leave our children to pay it tomorrow with interest.

Investing in Our Values

Over the past two years, we have made deliberate choices to move toward long-term stability and ensuring that tax-payer funds are being used to have as wide-reaching benefit as possible:

Healthcare Access: In partnership with the Masons and South Island Primary Care Society, we invested $1.7M to provide space for up to 10 doctors, creating a healthcare home for over 12,000 residents.

Childcare: We secured over $10M in grant funding for 100+ daycare spaces, co-located with housing and arts centers.

Public Safety: We transitioned our fire hall from volunteer to 24/7 staffing allowing the long empty hall in happy valley to be fully staffed. Additionally we have authorized a nearly 20% increase in RCMP officers.

Community Wealth: We secured Woodlands Park at a discount (Thanks to a tremendous community donation) and kept the YMCA/Aquatics Centre open, a move set to save taxpayers over $100M over the next 20 years compared to the previous Public-Private-Partnership model which was liability-heavy.

Asset Management: We have the stage set to fund a plan so that we pay for the roads and infrastructure we use today, rather than leaving a bankrupt infrastructure to our children (look no further than Calgary to see what happens when this isn’t funded).

The Trolley Problem: 15% vs. 3%

As we look at the 5-year financial plan, we are faced with two extreme tracks.

Track A: The 15% Path (Investment & Solvency) This includes an 8% baseline increase for "uncontrollable" costs: provincial downloads (E-Comm), RCMP contracts, and debt. The remaining portion allows us to repay "internal borrowing" debt the city took from its own future with no repayment plan going back to early 2000. This path maintains our festivals, beautification, and emergency services.

Track B: The 3% Path (Cuts & Liabilities) To get to 3%, we pull the lever and the trolley hits:

Safety: No new RCMP members.

Culture: Cutting three or more major community festivals.

The Future: Failing to pay back internal borrowing, effectively "selling the furniture to pay the rent," much like the 2018-2022 term where an estimated $20M in land was sold to bridge gaps.

The Bottom Line

There are no "easy" solutions. Anything below an 8% increase is not a saving; it is a service cut and a debt-load shifted to the next generation. Anything above 8% is an active investment in making Langford a modern, self-sustaining city, but a cost we have to pay today. 

We must decide: Do we continue on the track toward paying the true cost of our city today, or do we return to the path of borrowing from the Langford of tomorrow?

Gender Income Gaps, Shelter costs, and equity

 

Source: https://blog.vantagecircle.com/gender-pay-gap/

               Time to be a little bit of a nerd and get excited about census data release day. Unfortunately, other than the data being released, there is little to get excited about.  In the below image we can see the income profile for men and women in Langford. What we see is, unfortunately, reminiscent of what is seen in many communities around Canada, Women tend to be over-represented in the lower incomes, while men tend to be over-represented in the higher incomes. Without getting into the causes, or some of the (terrible) justifications for a gender wage gap, I want to take a look at the impact this has on the security of housing.

               With highly inflated house prices and interest rates on the rise, I wanted to take a step away from the ownership discussion because i) the current carrying costs of qualifying for a new mortgage are so ridiculous that very few people possibly could unless they already have a sizeable amount of equity and ii) because the recent census release also included the housing tenure information which showed that, at just over 35%, an increasing number of Langford residents are renters.

               With ownership, the majority of owners are shielded by wild swings in the valuation of their property, and with most Canadians utilizing fixed-rate mortgages, many will continue to be shielded from interest rate fluctuations for up to the next 5 years.

               The same is not true for renters. Renters typically face annual rent increases up to the maximum as set by the provincial government. But as renters move due to changing housing needs, or to be closer to work, or due to eviction, their rent is re-negotiated at market prices. This means that renters are far more susceptible to paying the current market rent than homeowners are to the current market payment for housing. That is, Renters are more likely to be paying the current, high, market price of rent, well homeowners are more likely to be locked into a constant, lower, payment for their home.

               Thus, if we look at current market rents, versus current incomes, what we find is that only the top 19.85% of income earners are able to afford an average 1-bedroom rental at an affordable rate in Langford.

               Note: Affordability is determined as 30% or less of your before-tax income going towards shelter.

               What is exceptionally troubling is if you break this down by gender. Amongst those identified in the census as male, the top 26% of income earners are able to obtain the average 1-bedroom at an affordable rate.  While only the top 13.7% of female earners are able to obtain a 1 bedroom at an affordable rate.

               It is often presented that renting is a stage of life that you get through until you can obtain high enough income and wealth levels to afford to buy. What we are finding is that this is untrue, with all but the highest income earners being unable to rent a 1-bedroom in an affordable fashion.

               Many argue that this is an unfair verdict. The average household in Langford is 2.4 people, after all, thus most of the time these shelter costs are split between two income earners. We can similarly look to see what percentage of households are able to afford a 1-bedroom. The issue that then arises is that a 1-bedroom may not be suitable for a 2.4-person household – but we will overlook this to maintain a constant comparison.

               The further issue is social in nature and is that as housing becomes increasingly unaffordable for a single individual it encourages individuals to remain in relationships they may not otherwise remain in out of economic necessity. This creates understandable problems that I will not go into here.

               Just the same, we can see in the image below the distribution of household incomes, and from this determine that only the top earning 31.25% of households would be able to afford a 1-bedroom rental at an affordable rate. While this is better, it still signifies a huge problem in that only the top-income earners can afford to rent at an affordable rate.

          With homeownership becoming increasingly out of reach resulting in an increasing percentage of our residents being renters – we cannot afford to overlook this segment of the population. As a city, we need to ensure that rentals are being built and provided to residents at an affordable rate. It is through the initial years of renting that a household can build up the wealth needed to enter the housing market. If the rental market itself is closed off to all but the highest income earners then how can this happen?

This is clearly an issue that affects all members of society, even those in the top income brackets. What do you see as a potential solution? 

Feel free to comment below.