B.C. municipalities keep racking up bigger and bigger surpluses

The next time your city hall says they're strapped for cash, take a closer look at their audited financial statement. 

For the seventh straight year, the cumulative surplus for all 162 B.C. municipalities went up in 2018, reaching $2.98 billion, up 27 per cent from 2017. 

Much of that surplus went back into reserves to pay for future capital projects. 

B.C. municipalities had a total of $6.4 billion in net financial assets, up from $5.4 billion in 2017. 

"[We're] trying to make sure development pays its way, and that means we end up with a reserve in order to fund some of the needed infrastructure once development happens," said Coquitlam Mayor Richard Stewart, whose municipality recorded a $179 million surplus in 2018 (fifth highest in B.C. behind Vancouver, Surrey, Burnaby and Richmond) and has $523 million in net financial assets (third highest, behind Burnaby and Richmond). 

Frank Leonard, former Saanich mayor and chair of the Municipal Finance Authority of B.C., says it's part of a longstanding political culture in B.C. communities. 

"British Columbia is a very small-c conservative, pay-as-you-go approach," he said, adding that such a strategy helps a municipality's credit rating. 

"Whether it's Trail or Campbell River, [cities] try and pay as you go as much as [they] can, and even build up surpluses so that you can do some projects without having to borrow money at all."

Balancing act

Leonard specifically cited the budgetary acumen of Burnaby, which now has $1.6 billion in net financial assets, double that of any other city in the province.

"[Fomer mayor] Derek Corrigan at Burnaby left them debt free, which was remarkable. And people might not have associated somebody as high profile on the left of the political spectrum as [having] so strong a pay-as-you-go mentality," he said.

However, Corrigan lost his bid for re-election in Burnaby last year to Mike Hurley, who said the city had been moving too slowly to provide new infrastructure.

Now the mayor, Hurley said Burnaby residents shouldn't expect the spending taps fully turned on — but that capital projects should begin moving quicker.

"We're still going to be fiscally responsible ... but at the same time we need to deliver what's needed and what our residents expect us to deliver," he said. 

"We don't want to wait too long. And you know, people like myself, who have paid taxes in the city for a long time, might never see any of these benefits come through."

Some cities in debt

Of course, just because B.C. cities on the whole are doing well doesn't mean all of them share the same rosy picture. 

"We are in a devastating position financially," said Neil Belenkie, mayor of Belcarra.

The small Metro Vancouver municipality was one of only two in all of B.C. last year to have both a deficit and a cumulative debt.

That net debt is just $2.5 million — but Belcarra's population is only 643 people, making tax increases only minimally effective.

"We're doing everything we can to get out of this, but we are in a horrific position," said Belenkie, who wants the province to let Belcarra apply for grants usually only considered for more rural municipalities. 

As for the rest of the province, Stewart anticipates the years of exploding surpluses might come to an end with the slowdown in the housing and construction markets. 

"That's not just a risk, it's a likelihood," he said. 

"Cycles have ups and downs, and so we make certain we take advantage of ... collecting the money when the development is taking place, and then knowing that we don't need to spend it right away. It's just prudent."