British Columbia

Surrey mayor says he's 'shaken' by city's debt -- but how big is it?

Surrey Mayor Doug McCallum says he is "deeply dismayed" by the city's spiralling debt. But not everyone agrees about the size of the debt and what needs to be done to get it under control.

'I was deeply dismayed and shaken to the core' to see how much debt [there was]'

Doug McCallum, who served as Surrey's mayor from 1996 to 2005, at Crescent Beach Park. (Jeremy Allingham/CBC)

Surrey Mayor Doug McCallum says he is "deeply dismayed" by the city's spiralling debt and is vowing to get it under control.

But not everyone agrees about the size of the debt and what needs to be done.

The controversy began when the mayor issued a news release just after midnight Tuesday saying he was "shaken to the core" when he learned about the red ink on the city's books.

"Council has been apprised that the city is currently carrying a debt of $514 million," said the statement from the mayor's office.

In fact, CBC News has confirmed the debt-load found in the city's financial report from December 2017 is $267-million or about $500 per resident.

Late Tuesday afternoon, the mayor's office issued a follow-up statement saying, "The $514 million figure is actually the projected debt the city would incur under the current five year financial plan approved in December of 2017, if it was allowed to proceed to completion."

Pay-as-you-go system proposed

As part of his plan to bring down the debt, McCallum says he wants to see Surrey "operate like a regular household" by saving and paying bills as they are due.

The mayor says he is confident the planned pay-as-you-go system will not affect programs and services across the city. But he said in a statement council must determine how to "responsibly proceed with capital projects."

Doug McCallum is sworn in as Surrey's mayor at a ceremony at city hall on Nov. 5, 2018. (Colin Fode/CBC)

"When I was previously mayor for nine years, I took great pride in running the city's finances by saving first and avoiding debt. Council and I have agreed to immediately bring the city's fiscal house in order," McCallum said.

Debt overstated?

But a former opponent of McCallum says the new mayor is overstating Surrey's financial issues. Bruce Hayne is a former Surrey councillor who ran against McCallum in the October civic election. 

"I think there's some fear mongering going on because I don't believe, first of all, that the debt is over $500 million. I looked at the financial statements and it's, as I said, somewhere around $250 million."

Tom Gill also ran for mayor against McCallum after years on council and says McCallum's late-night news release about "spiralling debt" is overstated given the massive growth in Surrey. He said looking at debt alone ignores the city's surplus and assets.

"The accumulated surplus for the city is well over a billion dollars," he said, noting Surrey was recently honoured by the C.D. Howe Institute for being financially transparent .

Gill says there have been investments in the city core in the past decade with the creation of a new downtown core, a new city hall, two aquatic centres, five ice rinks and other infrastructure projects.

The City of Surrey built a new city hall four years ago. (CBC)

And he criticizes how the books were balanced when McCallum was mayor, noting in the past the City of Surrey sold off $100-million worth of land to avoid raising property taxes.

Spiralling debt or scapegoat?

"I have huge concerns about what happened in the past and that's something that I personally put a stop to as chair of finance," he told CBC.

Gill believes the land that was sold would be much more valuable now.

Surrey Mayor Doug McCallum, left, and Vancouver Mayor Kennedy Stewart, right, both met with Prime Minister Justin Trudeau after they were elected and said it was their priority to work together. (Justin McElroy/CBC)

"[Surrey] is very well situated and our financials are very strong ... It's unfortunate that a government that's not able to deliver on their promises is looking for a scapegoat and is looking at the past."

Since being elected McCallum has promised to replace an approved Light Rail Transit (LRT) project with SkyTrain. He has also promised to replace Surrey RCMP with a city-run police service.

Both are expensive projects with uncertain price tags.

A budget report prepared by staff will be presented to Surrey's finance committee on Dec. 11. McCallum said he and council won't comment further until they have reviewed that document.

With files from Canadian Press

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