Is Qualicum Beach Financially Sustainable?

You might be pleased to see that your QB municipal portion of property taxes are only increasing by 6.5% in 2026. However, the more important question to be asked is whether this is sufficient for the town to achieve financial sustainability.

I have written several articles about the towns inability to replace aging infrastructure due to the lack of reserves and squandering what little reserves we have on non urgent nice to have initiatives.

You may recall that in the fall of 2025 town council effectively tore up the 2025-2029 financial plan to enable the unplanned purchase the Eaglecrest golf course. To source the needed cash to close the transaction, council raided most of our reserves and also took further funds from contributed surplus (working capital). No where in the 2026- 2030 financial plan are we given a full list of how much was taken from which reserve, completely negating the public's ability to hold council to account, ensuring these fund are indeed restored once the "envisioned" surplus lands are ultimately sold. "

Leaving the golf course aside and giving council and staff the benefit of full integrity to replace the reserves, the proposed 6.5% property tax increase contributes little to no progress in achieving financial sustainability.

A pragmatic approach to financial sustainability focuses on capabilities.

These include:

-Offering a level of service commensurate with the willingness to tax and ability of taxpayers to pay.

-The ability and willingness to adjust service levels and enhancements in response to changes in economic conditions or availability of grant funds.

-It can keep its infrastructure in a state of good repair by accumulating sufficient reserves ensuring continuous service delivery to residents without expensive repairs or outright failures.

What does the town need to achieve financial sustainability?

1) Despite a modest increase to both water user and parcel fees in 2026, the resulting expected combined water related revenues are still not achieving full cost recovery of water operations and related capital costs. This is critical and urgent work to do, as in current financial plan, it will take approximately 25 to 28 years to replace remaining aging water infrastructure that should be replaced by 2040 (in 14 years) as per the engineering report commissioned by the town in 2002. The cost of deferring these Asbestos Concrete pipe replacements has ballooned from $200 per meter to $1600 per meter in todays cost and we have approximately 28,000 meters yet to go.

2)Enhanced contingency planning for shorter term needs. The current budget is relying on $26 million in uncertain grants and a further $17 million in uncertain land sales in order to balance with planned capital and operational spending. An example of this envisioned funding source is the critical $1.2 million Little Qualicum River Erosion Stabilization project to be grant funded as there is insufficient funds in the Water Reserve to complete this critical work to protect our well head assets. Given the very unpopular cuts made at the provincial and federal government levels in recent weeks, the likelihood of this grant being successful remains highly uncertain.

3) Increase general infrastructure reserve funds to ensure funds are accumulated at a pace quick enough to repair and ultimately replace infrastructure assets. ( Roads, Drainage, Buildings) Based on the towns currently plan we are only making token increases to the general reserve account. The current plan envisions 1.3% tax increase compounding annually to reduce the funding gap. This approach will take approximately 15 years just to achieve the annual reserve contribution level currently required with no adjustment for inflation. In order for this approach to be at all effective it is critical that current replacement value of the existing asset base is updated in the financial model annually. It is my understanding from comments made by the town Director of Finance, no updated replacement cost asset values were used to create this years asset management reserve requirements. We are still using January 2024 data. As the province is experiencing very high rates of inflation in infrastructure construction costs, one would expect the the reserve requirements to increase proportionally each year. Determining the amount required for various reserves asset is not a defined science. At best, it is the function of best available current information and well reasoned assumptions. The amount must be quantified and risk tested with varying assumptions. Otherwise it is a stab in the dark with a dull dart.

Each year, repairs and replacements are still required and we do not expect to have sufficient funds on hand in our reserves as they are required to be spent. This results in deferrals which may lead to costly repair costs and interruptions' in service. Some of the challenge can be solved by the use of debt which may be appropriate for long term assets such as proposed for the new works yard. Further analysis needs to be done to determine where debt is appropriate and which buildings should be closed and/or divested. Again this work is urgent and important to ensure accurate estimates for reserve requirements to minimize major tax spikes in the future.

4) Like other towns on the Island, Qualicum Beach grew rapidly through 1970's to 1990's. As a result much of the towns infrastructure is aging rapidly and now requires more immediate funding for replacement. Our current new home builds are very limited so we are not adding significantly to our tax base to help fund the reserves. Our challenge is to keep operating costs low while allocating the tax increases towards increased reserve allocations. Staffing has increased by18 staff members since 2022 or 30%, while our population growth during that period has been relatively stable. The town needs to consider reallocation of staffing to those areas that either reduce on going costs or are critical service functions. For example, increasing finance department manpower to enable more analytical work to ensure user fees reflect the real cost of providing services where applicable. Hopefully the resources we redirect to the finance department are producing increased revenues or other cost saving efficiencies for the town.

The town needs to start reviewing budgeted allocations to actual results, on a line by line basis. This is a key performance measure used by every well run organization, whether governmental, non profit or for profit. This analysis ensures we are achieving what we expected and the ensuing discussion forms the basis for further budget refinement. Without this discussion there is little value in all the effort put into the budgeting process beyond giving staff notional spending approvals.

5) To mitigate increasing tax rates other sources of funding should be explored.

For example Development Cross Charge policies and Community Amenity funding should be reviewed to ensure we are capturing funding similar to our neighbouring communities.

Is it too late for Qualicum Beach to be come financially sustainable?

The towns current financial situation was not made just in this councils term. It is a result of successive councils choosing to focus on other matters rather than maintaining a strong financial position. This situation is also not the result of the Eaglecrest purchase, which put emphasis on a "generation opportunity" over funding immediate repairs and a long over due works yard facilityup grade. We may have traded the liquidity of cash reserves for the risk of real estate speculation but at the end of the day this one transaction is not the only culprit.

One of the key duties of council is to set the direction of staff. This budget was created by staff with little or no amendment from Council. It appears the reduction of 8.1% to 6.5% tax increase was not a result of council directed reduced spending. Instead staff reallocated source of funding and increased expected building permit revenues.

If Qualicum Beach is to become financially sustainable it will require Council to take greater discipline and leadership in directing planned spending and review of actual year end results versus the plan. This ensures staff are kept accountable for control of operational costs and appropriate reserves are accumulated to achieve the funding required to repair and ultimately replace assets as required.

Residents need to be aware of the real costs and challenges that arise from successive councils continually "kicking the can down the road" and not addressing the elephant in the room. Determining the amount required for various reserves asset is a moving target and not a defined science. At best, it is a function of best available current information and well reasoned assumptions. The amount should be quantified and risk tested with varying assumptions. We need to let our council know that we actually expect them to be fiscally prudent and take steps now to ensure taxpayers are not faced with many years of double digit tax spikes in order to get our financial house in order.

Marie Noel

March 17th 2026