How does Vancouver's budget actually work?

It’s fall, and that means it’s budget season at City Hall. Over the next three months, city staff will complete a draft of Vancouver’s annual budget, which city councillors will then discuss and finalize in December. 

Budgets can be complicated (even for dedicated observers like us), so we wanted to break it down to help our readers understand how it works in Vancouver.  

How is the city’s budget created?

The budget process directly impacts residents and business owners like you – it sets the city’s portion of property tax rates and lays out plans for what services and programs will be funded in the upcoming year. Because of that, it’s probably the single most important set of decisions the city makes each year.

The process starts in June with a budget outlook, which “provides Council with an overview of key factors impacting the development of the upcoming budget and the measures staff are taking to balance the budget and improve service delivery,” the city said in response to questions from Vancity Lookout about the process. 

The outlook presentation “serves as a starting point for staff to begin the work of building the budget and is an opportunity for Council to provide direction, sometimes including specific property tax increase scenarios, to guide the development of the upcoming budget,” they added. 

How is the public involved?

The city wants the public’s feedback to shape the budget. For the past month, they’ve been surveying Vancouverites, asking for our priorities and preferences for the 2026 budget. You can still fill that out here, but make sure to do it soon — the survey closes on September 14.

What’s the timeline?

Staff will summarize all the public feedback from the survey into a report to city council in December. That’s part of the final stage of the process at the end of year, when staff will present a draft budget that incorporates council direction, as well as updated information like possible ways to improve the budget outlook through new revenue sources and efficiencies. Council then discusses, amends, and votes on the final budget that will set the city’s course for 2026.

In anticipation of this impactful but complicated yearly process, here are a few key things you’ll want to keep in mind as we head into this year’s budget.  

How much are property taxes expected to increase this year?

For the 2025 budget, Mayor Ken Sim and ABC-led council directed staff to limit property tax increases to 5.5 per cent, after approving increases of 7.5 and 10.7 per cent in their first two years in office. The final increase for 2025 eventually came in under that threshold at just below four per cent.  

Fast forward to this June, Sim, with the support of ABC councillors, directed staff to create three scenarios based on property tax increases between one and 3.5 per cent, in an effort to “make life more affordable for Vancouverites,” Sim said. 

However, according to the 2026 budget outlook, property tax rates would need to increase by six to seven per cent in order to maintain existing services and fund infrastructure upgrades. That’s a similar rate hike as what was originally projected by staff for 2025.

Increases to the city’s property tax rate are set by council based on the city’s budget needs, not on changes to property values. Property taxes are a core part of how the city pays for services, funding over half of the city’s yearly operating budget. If property taxes are cut, the tradeoff is that it would likely result in reduced services and increased fees at city facilities. 

However, the city only has some control over the property tax bill received by Vancouver home and business owners every year. The city also collects property taxes for other governments and service providers, which set their own rates. Those include taxes from the province on assessed land value and to pay for schools, from TransLink to pay for transit, and for Metro Vancouver to pay for utility fees like water and sewer. 

How have taxes changed over the years?

On average, city property taxes have increased about 5.5 per cent per year over the past ten years. Last year’s 3.9 per cent increase was the lowest since 2016 and 2017 when the Vision Vancouver-led council approved 2.3 and 3.9 per cent tax hikes. 

How do Vancouver’s property taxes compare to other jurisdictions?

Vancouver is in an interesting position for property tax rates, depending on who we compare ourselves to. On one hand, Vancouver property owners (and by extension lease holders) pay the second-highest amount in property taxes and utility fees among our regional neighbours. 

But the broader context is that B.C. cities have some of the lowest property tax rates in all of North America. While the low rate is good news for home and building owners, it’s a situation that fuels inequality, according to the Canadian Centre for Policy Alternatives. 

Does the city ever run a deficit?

The city isn’t like the provincial or federal governments, which can run ongoing deficits — legally, Vancouver and other municipalities can’t spend more money than they bring in each year. The result is a surplus, which is reinvested in projects and reserve funds. 

Sometimes, the accounting can look weird…

In 2024, the city’s revenue increased by nearly $550 million, creating an annual surplus of just over $860 million, according to Vancouver’s 2024 financial statement. 

So why is the city struggling to pay for projects like new pools and community centres? It’s a reasonable question if, like me, you're not a CPA or MBA.    

According to the city, in many cases, an annual surplus comes from revenues coming in earlier than the expenses they are meant to cover. So, for example, in 2024 the surplus came from Empty Homes tax revenue, investment income, and contributions from developers for community amenities and infrastructure upgrades. 

So while the city’s financial statement last year looks flush, much of that money is already spoken for and restricted to specific uses. 

In 2023, ABC councillors voted to halt a planned increase to the Empty Homes Tax from three to five per cent. COPE councillor Sean Orr plans to bring a motion to council next week that would reverse those changes and undo an ABC exemption to the tax for homes that have been built but are yet to be sold, according to the Vancouver Sun.

How big of an issue is Vancouver’s aging infrastructure? 

The city has a problem with aging, outdated infrastructure. That’s reflected in its $500 million annual infrastructure deficit – that is, the amount of money that’s required to continue renewing aging infrastructure. 

It was a point of concern for about three-quarters of residents surveyed in 2022. However, the same survey found a majority of people opposed increases to property taxes or utility fees to help cover the costs. 

A scathing audit of the city and park board’s management of recreation facilities, released yesterday, found that facilities have not been managed effectively, leading to higher maintenance and repair costs and shortened lifecycles for the city’s community centres, pools, and ice rinks.   

City data from 2022 found that 76 per cent of the city’s recreation facilities are in poor or very poor condition, and require $33 million more per year to be properly maintained and replaced.