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End of HST hits Surrey in the pocketbook

For just three projects, the city is facing $4 million in extra unbudgeted costs
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Surrey Coun. Tom Gill

Surrey taxpayers are taking an unexpected hit with the switch back to the Provincial Sales Tax (PST).

In three civic projects alone, Surrey will have to shell out $4 million more with the dissolution of the Harmonized Sales Tax (HST), which combined the Provincial Sales Tax (seven per cent) and Goods and Services Tax (GST, at five per cent).

Under the HST, Surrey would have received a 10.25-per-cent refund for building materials.

The extra costs for the new city hall in Whalley will be another $1.5 million, while the tab for two recreation centres are jumping $2.5 million.

Those extra costs were not factored into the current budget, so when Surrey sits down to figure out next year's budget, savings will have to be found.

"I think we have some significant challenges in our finances, there's no question," said Coun. Tom Gill, chair of the city's finance committee. "Yes, we need to find some of the dollars."

Surrey is writing a request to the provincial minister of finance asking that the PST on supplies be reimbursed, but even the most hopeful don't believe that's going to happen.

Gill believes the city can stick to its plan of property tax increases of 2.9 per cent annually with a one per cent road levy.

He thinks the savings can be found internally at city hall. But that may pose a significant challenge to staff, which is already operating well under budget – partly due to vacancies, particularly in fire services, engineering, planning and development, and the city manager's office.

Gill said it's far too early to say where the savings will be found.

"I think it's going to be a combination of finding the money internally through the existing budgets or looking at some revenue-generation opportunities we may not have looked at in the past," Gill said.

Surrey council won't be considering the 2014 budget until fall, but Gill said the anticipated impacts are already back of his mind.

"What worries me still is the (funding for) roads," Gill said. "That would probably be the one priority for me just from the engineering side."

@diakiw