Unlike his counterpart in Vancouver, Abbotsford Mayor Henry Braun isn’t worried his city will go bankrupt during the COVID-19 shutdown.
On Sunday, Vancouver Mayor Kennedy Stewart said his city could face bankruptcy in the months to come because large numbers of property owners had said they might not be able to pay their taxes. The CEO of Translink, meanwhile, has warned that the organization is losing $75 million every month and could encounter cash flow issues “within weeks.”
Braun, though, says Abbotsford’s finances remain in relatively good shape – and that many residents and businesses will have already actually paid the bulk of their property taxes.
“Fortunately, the City of Abbotsford is in good financial health,” Braun said. The city has added millions to its coffers over the last seven years, and while much of that money is tied up in reserves that can only be spent on certain types of capital projects, the city has about $43 million in cash that it can call upon if needed.
It’s not enough to get the city through a full year – the municipality’s total annual spending is just shy of $150 million – but Braun says it’s enough to get all the way to October, even if nobody pays their taxes. And Braun says he has heard from enough people who are able to pay those taxes to enable him to feel good about the fiscal stability of the city.
“I’ve had lots of phone calls from people who’ve said not to worry, they’re going to pay their property taxes,” he said. “I was pleasantly surprised.”
That confidence is also linked to one of the reasons why he thinks the July tax deadline should remain fixed.
Braun noted that property tax payments are often baked into the regular mortgage payments people make to their lenders. Landlords – particularly large, institutional building owners – do the same with rental payments: a slice of each month’s rent is inevitably earmarked for property tax.
That means many people have already paid the bulk of their property taxes, but the money just hasn’t yet made its way to the city’s bank account.
“Those moneys are sitting in lending institutions’ trust accounts,” Braun said. “They have collected those funds and are willing to go on July 2nd.”
He said it’s also incumbent on those businesses and residents who can do so to pay their taxes.
But Braun said he also knows many people are reeling financially.
“There will be people who are in desperate straits,” he said. “There will be people who need help. We can’t do it all by ourselves, but we could reduce or eliminate [late payment] penalties.”
A tax deferral program already exists for seniors over 55.
Braun noted that the federal and provincial governments are spending huge amounts of money to help ease the pain. But he said that the longer the current situation goes, the more it will force companies, governments and societies to reconsider how they operate for the long-term.
“If this goes on for six months, we may have to adjust how we do everything.”
Braun also stressed the importance of patronizing those local businesses that have been able to stay open while complying with social-distancing orders.
“Small businesses still support 80 per cent of the jobs in Canada,” he said. And yet, he noted, many of them lack the cash reserves that allow larger corporations to survive.
“Like never before, we need to support our small businesses.”
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