Surrey Mayor Doug McCallum says he’s sticking to his 2018 campaign promise of keeping taxes low and forming a new municipal police force.
As such, a 2.9% residential property tax hike — slightly above this year’s regional inflation rate and the lowest level of infrastructure investments in at least 10 years — is what’s in store for Surrey residents in 2020, according to a proposed budget that sets aside $45.2 million for the police transition over the next two years.
Those police transition costs also mean the City of Surrey will put a freeze on hiring new city staff, police officers and firefighters in 2020.
After city council cancelled 17 capital projects last year, including the Cloverdale Sport and Ice Complex and Grandview Heights Community Centre, the city is now proposing just $17.3 million for major capital projects in 2020, with no significant projects planned to 2024. Two previously approved projects — the Clayton Community Centre and a city-subsidized YMCA centre — account for a majority of the 2020 major capital projects budget, outside of statutory and asset maintenance, such as roads, parks and utilities, and the $25.2 million in 2020 earmarked for the police transition. Also remaining in the budget are some small capital projects, such as the Nicomekl Riverfront Park and a kabaddi facility.
The public can comment on the budget and five-year financial plan online (click here) until Thursday evening or speak to council on December 2 at city hall starting at 1 p.m.
On Friday, McCallum told media there is planning money in the budget for the Cloverdale rinks, which may now become a multipurpose facility. The budget shows $50,000 for 2020 and $10 million earmarked in 2024.
McCallum holds together a majority coalition of five council members but has taken flak from councillors outside Safe Surrey Coalition for his belt-tightening, aside from the police transition spending. Last year he said the city should bring down its debt, which stood at $229 million at the end of last year. By comparison, Burnaby has no debt, and Richmond has just $32.8 million owing to the Municipal Finance Authority, which only grants loans for asset purchases and not municipal operating debt, which is prohibited by law. Last year’s cuts removed $136 million in future debt load.
While high in debt, Surrey spends the least amount of money per capita, according to a 2018 Fraser Institute report based on 2016 data. And according to last year’s budget, it has the second-lowest residential property taxes in the region.
Its debt is coupled by the fact it has the lowest net financial assets per capita in the region ($110 in 2018). Had the city continued to pursue capital projects without raising taxes, its net assets were projected to fall into a deficit.
McCallum’s project cancellations come after years of “aggressive” capital project financing, according to last year’s budget.
However, after initially running alongside McCallum’s team during the 2018 election, Couns. Brenda Locke and Steven Pettigrew oppose the police transition in its current incarnation, especially as it relates the proposed budget.
Locke said the budget is “disingenuous,” and she wouldn’t oppose increased taxes earmarked for infrastructure. She said cutting a 1% property tax levy for road improvements last year was a mistake.
“All the money is going into the police transition. It will cannibalize everything we’re doing to build a better city,” said Locke.
Pettigrew said he too wouldn’t oppose higher taxes for more facilities and road expansion and repairs.
Pettigrew said the budget “guts the city” and “the infrastructure is now worse than when we came into office.”
According to the proposed budget, the police transition costs will largely be offset by the property tax increases ($15.8 million), which includes a 5.5% hike to business, as well as new tax revenue from growth ($3.3 million) and a 2.9% hike in utility rates ($2.8 million).
With McCallum wanting the municipal force running by April 1, 2021, the transition costs in the budget include a 15% “conservative contingency” on top of the $39.2 million in transition-related costs outlined in the previously released Police Transition Report (one-time capital costs of $19.8 million and transition staffing costs of $19.4 million).
A new municipal force is expected to add more pressure on the budget in the future. In total, the city will spend $84.4 million in additional operating costs over the next five years for policing. For instance, the city’s total police budget in 2019 was $166.2 million; however, it’s expected to rise to $205.6 million in 2022, the first full year of the proposed Surrey Police Department. A significant factor in those rising costs is the loss of a 10% federal (RCMP) operating subsidy and higher salary costs associated with municipal policing.
The new police force is projected to initially carry 805 officers, which is short of the 843 RCMP officers authorized to police Surrey but more than the 792 officers who are deployed after factoring in 51 vacancies in 2019.
McCallum said the costs have been clearly outlined in the transition report, and he dismissed Locke’s criticism that the costs were being hidden.
Another added pressure that’s been pushed down the road is city staff requirements. Despite the 2.9% increase in residential property taxes in 2020, residents will not realize a likewise inflationary increase in city staff.
“Outside of staffing related to new city facilities, there will be no additional staffing increases across the board for 2020, similar to 2019,” notes the budget proposal.
“Although current staff deployment can accommodate growth and minimize service level impact, it is noted that this is not a long term sustainable strategy.”
Likewise, while the city’s contract with firefighters expires on December 31, the budget makes no room for new funding in the fire department, save for $120,000 in operating costs on top of its existing $66 million budget.
“Due to the priority in establishing the [Surrey Police Department] and keeping tax increases to a minimum, current deployment strategies will enable a new funding request to be delayed for the upcoming year.”
As has been the norm with recent population growth of roughly 2% per year, the city’s firefighters will be required to handle calls from thousands of new residential units, as the city had 4,142 housing completions in 2018, the most since 2010, and city hall is on pace to issue more construction permits in 2019 than it did in 2018.
“Planning of future requests for growth in staffing is necessary for continued effective delivery of service,” states the operating budget, prepared by finance manager Kam Grewal and city manager Vincent Lalonde.
Coun. Linda Annis said an existing deficit of firefighters will grow worse with the budget. "Surrey has one firefighter for every 1,500 residents, while Vancouver has one firefighter for every 800 residents. In addition, Surrey is literally the size of Vancouver, Richmond and Burnaby combined. This is a big city both in terms of residents and geography, and we need to keep up.”
The budget also outlined grants to community organizations. For 2020 grants, will remain on pace with inflation, with the city handing out $1.84 million. Notably, the Surrey Board of Trade did not file an application for a grant. Last year, council cut its usual $40,000 annual grant to only $10,000. This year, McCallum cancelled holding the mayor’s customary annual address in front of Board of Trade members. Huberman and McCallum have disagreed with one another on the police transition and ride hailing, with McCallum opposing the latter.
Huberman said the 5.5 % tax increase to businesses is unjustified and will hurt economic development.