City of Surrey expecting average monthly budget shortfall of only $4 million

Apr 15 2020, 12:12 pm

Metro Vancouver’s second largest municipality is forecasting a relatively modest budgetary shortfall of $4 million per month, and between $37 million and $42 million by the end of 2020.

The City of Surrey says it has been able to limit its losses by taking proactive measures to mitigate the effects of COVID-19 on its budget. The estimates are based on health safety restrictions easing by early summer.

“The City of Surrey has been working long before COVID-19 was declared a pandemic to find ways to weather the storm,” said Mayor Doug McCallum in a statement.

“As a result, we are operating in a position of relative strength during this unprecedented time. While there remains a financial burden to bear, we are ensuring that the city’s fiscal house remains stable as we concentrate on delivering the services that are within the mandate of the city.”

Few details have been provided at this time on the municipal government’s strategy and a breakdown of its savings and new costs. But the city has already temporarily laid off at least 2,000 employees, mainly within parks and recreation, and libraries.

McCallum was the only mayor amongst the region’s 21 municipal governments who did not sign a joint open letter to the provincial government seeking financial assistance, property tax deferral funding, and other initiatives supporting municipalities.

On its part, the mayor says the city has already moved the March 25 payment deadline for annual flat water and sewer utilities by 90 days, and city council is in the process of considering extending the payment due date for property taxes from July 2 to September 4.

Surrey’s 2020 budget was $1.44 billion, with $843 million towards operating costs and $585 million towards capital costs. It was expecting $1.195 billion in revenue, including $391.7 million from property taxes and $306.4 million from fees and charges, but not including $247.194 million in total transfers between various funds.

Contrast the City of Surrey’s fiscal outlook during the coronavirus crisis with the City of Vancouver, which is expecting a revenue shortfall of $92 million if restrictions are lifted by the end of May with a three-month recovery period, $152 million if restrictions are lifted by the end of August with a six month recovery period, and $168 million if restrictions are lifted by the end of December with a recovery period extending into 2021. These figures do not include the potential cost of deferring property taxes and the potential for property tax defaults.

Vancouver is expecting an immediate revenue reduction of $4 million to $5 million each week due to COVID-19, which is about a 50% decrease compared to the budget.

But there are some takeaways from Surrey’s revenue losses by simply looking at Vancouver’s losses.

Between the three scenarios, Vancouver is anticipating losses of $29 million to $51 million from parking, $21 million to $38 million from parks and recreation, $10 million to $17 million from bylaw fines, $6 million to $14 million from permit and license fees, and $6 million to $12 million from civic theatres.

Surrey made it clear before, it is not dependent on parking as a major revenue source, and Vancouver has a significantly larger network of community and recreational facilities. As well, Vancouver owns and operates some of the region’s largest cultural and entertainment venues — the Orpheum, Queen Elizabeth Theatre, and Playhouse — that usually generate net revenue for the city.

Vancouver’s 2020 operating budget was originally set at $1.6 billion. Another $502 million was set aside for new capital projects this year.

According to 2016 statistics, Surrey has one of the lowest municipal spending in Metro Vancouver per city resident, about 40% less than Vancouver’s rate of spending on each city resident. But West Vancouver and New Westminster top the list for their per capita spending.