Owners of an average detached home in Surrey will face a 10.7% increase to their municipal tax bill next year.
The tax hike is part of the city’s controversial budget, passed 5-4 at Surrey City Council Monday.
“I have never seen a budget as good as this one for the times we are in,” said Mayor Doug McCallum.
On Tuesday, the city released a statement, framing the tax increase as “holding the line,” with only a 2.9% increase for general property taxes, plus a tripling of the $100 capital parcel tax to $300 per home.
Because the parcel tax is a per-household fee, the percentage increase for the combined municipal taxes will be greater for lower-valued residential units. Likewise, owners of more expensive homes will feel a smaller pinch.
The budget passed with support of the mayor’s Safe Surrey Coalition, including councillors Doug Elford, Allison Patton, Laurie Guerra and Mandeep Nagra.
“Some people have referred to this as a seniors’ tax, or poor tax,” said Coun. Steven Pettigrew.
The tax was not well received by those attending a November 30 finance committee online meeting, which saw no one call in to express support for the budget.
North Surrey resident Annie Kaps suggested on Monday, speaking to council via telephone, that she had sent the mayor an early Christmas present to city hall.
“I hope, again, that you enjoyed your coal and your parcels today,” said Kaps.
Coun. Brenda Locke attempted numerous times to have finance manager Kam Grewal explain the impact of the parcel tax as a percentage increase for the average home on the whole – something financial documents and media releases have failed to disclose.
McCallum and Locke became frustrated with one another as McCallum wanted to move on from the question.
Grewal finally ceded the point, explaining that the $200 increase is tantamount to a 7.8% tax increase on a home valued at $1.1 million. Hence, the lower a home’s value, the higher that percentage will be, said Locke.
The overall tax hike is closer to 15% or more for lower-valued homes and so has a greater relative effect on lower-income people and seniors, said Locke.
The average value of a residential unit in Surrey is $879,200, according to the Fraser Valley Real Estate Board. Under the new budget, the owner of such a home faces a total 12.5% hike to its municipal taxes – however officials may define them.
The budget saw sharp divisions for other reasons, but chiefly the ongoing police force transition, from Surrey RCMP to Surrey Police Services (SPS).
The city is also not budgeting for more police officers next year – the third straight year Safe Surrey Coalition has frozen the RCMP.
However, the city is looking at spending $62 million on added operating costs for the SPS in 2021 while scaling back the RCMP contract by $45 million. While the city has always factored in higher future police operating costs for a municipal force, it’s yet to be explained to the public how this transition will happen in its first year.
Pettigrew suggested the transition would not be so seamless as the city is projecting it to be in its budget.
“I don’t believe we can replace RCMP officers one for one with SPS officers,” he said.
Coun. Jack Hundial voiced his opposition to the budget on public safety grounds – although all councillors agreed 10 new firefighter positions was good.
Hundial also called into question borrowing $150 million for infrastructure during the pandemic.
“Certainly with the news today coming from Ottawa and Victoria, now is not the time to be taking on significant debt,” said Hundial, who opposes the police transition, in part due to costs.
Guerra said borrowing at record low interest rates makes sense, as opposed to raising taxes even higher in the near term.
Guerra also defended the additional parcel tax for infrastructure projects.
“For me, it’s worth it to fund the 16 projects on the go here. When you look at it, $200 a year works out to $16.67 a month and I guess I am willing to look at that and make those tough decisions to have the outcome of those 16 projects and what that money is going to fund,” said Guerra.
Locke said $17 per month was a lot of money for a low-income people.
Patton stated, “I still find it perplexing and shocking that we are saying we are not able to manage these changes when we are in the lowest one third” for tax rates among Metro Vancouver municipalities.
“It shocks me, just shocks me,” said Patton, calling Surrey “a beacon of light in difficult times.”
Both Patton and Guerra maintain the parcel tax is used for infrastructure and by law the money must go to new projects, which have been identified by the city.
The city’s news release on Tuesday stated the parcel tax will go to the Newton Community Centre and Land Acquisition project. However, financial documents show that the $90 million expense will come from the $150 million loan.
Hundial suggested to council that the city is moving money around to accommodate the additional police transition costs and added operating costs.
“It’s a shell game,” he said.
The city is raising 48.8 million from the parcel tax in 2021. This money first goes into “general operating,” according to policy. The city is then using $24.6 million from general operating for major capital works projects in 2021 and $23.1 million from general operating for the police transition (not police operating costs but rather the costs to actually transition the force), according to the capital works budget.
It is not clear from the news release how the parcel tax will directly fund $48.8 million worth of projects in 2021, or whether the parcel tax proceeds will be deferred to 2022.
Those police transition costs (considered to be a major capital works project) have ballooned this year from $45 million to $63.7 million. However, The city intends to push 15.4 million in added costs down the road to 2022-2024.
The extra 40% transition costs is a result of the city needing to build its own IT system as opposed to using the RCMP system.
