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Peacock Op-Ed: Municipal Spending Increases (Surrey Business News)

In B.C., municipalities are responsible for delivering a wide array of services, including fire and police protection, garbage and recycling, water and sewer services, parks and recreation, and roadworks. In Metro Vancouver, a region that is home to 2.5 million people, it is not surprising that local governments must earmark sizable sums to supply these services. Added together, the 21 municipalities that comprise Metro Vancouver spent $3.74 billion on operations in 2015. This is separate from their outlays on infrastructure and other capital projects; nor does it include spending by the regional district.

What is striking, however, is the pace at which such expenditures have been growing in Metro Vancouver. Over the past decade, total municipal spending in the Metro region jumped by a hefty 67 per cent.

How does municipal spending in Surrey compare? The basic answer is total municipal spending in Surrey has outpaced the regionwide benchmark, having more than doubled over the same time period. The more complete answer, however, makes adjustments for population growth, which puts upward pressure on municipal budgets. A more complete answer also considers the amount or level of spending per person.

For taxpayers in Surrey as well as most of the broader Metro area, there is some good news in the fact that municipal spending growth has moderated in recent years.

Between 2010 and 2015, per capita municipal expenditures across Metro Vancouver rose by 13 per cent. This is a notable deceleration from the much larger 28 per cent surge in per capita spending recorded in the half decade ending in 2010. In Surrey, per person spending between 2005 and 2010 coincidently matched the Metro-wide increase of 28 per cent. But over the past five years, per capita spending growth in Surrey slowed to just 23 per cent. So even after allowing for the fact that Surrey has experienced much stronger population than most other municipalities, it has not managed to slow the pace of per capita spending to the same extent as many other municipalities.

However, as alluded to above, both the growth and level of spending are relevant. Surrey homeowners and businesses, can take comfort in the fact that on a per capita basis Surrey is the most fiscally prudent municipality in the region. In 2015, for every resident living in Surrey the city spent $1,035 delivering services. The comparable figure for the Metro Vancouver region was $1,566, meaning Surrey spent just two-thirds what the average per person spend was across the region.

More impressive from a fiscal prudence standpoint is the fact that per capita spending in Surrey was the second lowest among all 21 Metro municipalities in 2015. The small municipality of Anmore eked out top spot for the lowest spending per resident by just $2. But back in 2010 Surrey held the distinction of having the lowest per capita expenditures of any municipality in the region, by a fairly significant margin.

Comparisons with the other larger municipalities are perhaps more relevant. In the City of Vancouver, the most populous municipality in the region, per capita spending was $1,841 in 2015, approaching double what Surrey spends in person terms. The comparable figures in Burnaby, Richmond and Coquitlam are $1,406, $1,538, and $1,262 respectively. In New Westminster, at $2,012, per capita spending was essentially double Surrey’s.

A concern for taxpayers generally is that nearly all Metro Vancouver municipalities operating expenditures continue to outpace inflation: the 13 per cent increase in per capita spending across Metro Vancouver is roughly twice what the rate of inflation was between 2010 and 2015 and even after allowing for population growth spending in Surrey grew at three times the rate of inflation. But in the case of Surrey, residents should recognize and applaud the fact that their city has the distinction of spending much less than other large municipalities and that it essentially has the lowest operating costs of any municipality in the region.

Ken Peacock is Chief Economist and Vice-President of Business Council of B.C. 

As published in Surrey Business News.