City of Surrey's 2024-2028 Financial Plan

ECONOMIC OVERVIEW

BRITISH COLUMBIA The British Columbia (“BC”) economy is forecasted to slow in 2024 with GDP growth estimated at 0.9% this year. The provincial unemployment rate came in below the national average at 5.5% with 6,600 jobs added in March. The province also reported the highest average hourly wage rate of $36.50 among all provinces. The BC government announced that the minimum wage will increase from $16.75 to $17.40 per hour on June 1st of this year. The 3.9% increase is based on the average rate of inflation in 2023. The Province has amended legislation so that future minimum wage rate increases are automatically pegged to the prior year’s average rate of inflation. Provincial CPI eased to 2.7% in March with shelter and food costs as the key drivers of price increases. Inflation, high interest rates, and housing costs continue to weigh down the economy. Elevated interest rates impact British Columbians more than other provinces due to higher house prices in BC, leading to greater mortgage servicing costs in the years to come. As inflation trends towards the BOC’s targeted range, interest rates will start to decline. However, rates are not expected to return to the historically low levels that consumers and businesses have been accustomed to. Renters also feel the impact of higher interest rates as landlords trickle down their increased costs to tenants. To support renters, the government introduced the BC renter’s tax credit which will provide up to $400 in income-tested tax credits to eligible renters. To support British Columbians facing high costs of living, the government is providing BC families with enhanced benefits. The Provincial budget included an expansion of the BC Family Benefit, a one-time Electricity Affordability Credit, and an enhanced Climate Action Tax Credit. The province is projecting that the average family will receive a $445 increase in benefits with BC Hydro customers receiving an one-time $100 rebate. The BC government also modified the Employer Health Tax (“EHT”) by raising the exemption threshold from $0.5 to $1.0M. Small and medium-sized businesses with payrolls under this amount will be exempt from paying the tax. The Province expects that 90.0% of businesses in BC will now be exempt from the EHT. The BC government is projecting a record-high budget deficit of $7.9 billion for their 2024/2025 fiscal year. The provincial government has attributed the shortfall to a slowing economy and increased spending. Provincial taxpayer-supported debt is projected to come in at $88.6 billion this fiscal year, climbing to $126.5 billion by the end of the 2026/2027 fiscal year. The government plans to spend $43.3 billion over the next three years to support health care facilities, housing needs, schools and roads.

City of Surrey | 2024—2028 Financial Plan | Financial Overview

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