City of Surrey 2019 Annual Financial Report

Financial Position

The City’s revenues in 2019 totaled $1,131.9 million, which is a decrease in comparison to revenues of $1,159.2 million collected in 2018. The decrease was primarily attributable to lower developer contributions, transfers from other governments, and gain on sales of assets and partnership interest for this year. This was offset by an increase in property taxes, utility fees, licenses, permits, development cost charges and investment income for the year. The additional revenue generated from increased property related fees and taxes was required to support a $9.3 million budgeted increase in public safety along with a $9.5 million budgeted increase in support for necessary labour and inflationary cost increases and other various corporate funding requirements, including $3.3 million related to the new B.C employer health tax. The City’s expenses totaled $842.4 million in 2019, which was an increase in comparison to expenses of $773.0 million in 2018. This year-over- year change was primarily attributable to increases noted in General Government, Police and Fire services, Parks, Recreation & Culture programming, and in the cost of Water, Sewer, Drainage and Solid Waste. Investments City staff diligently continue to administer our investment portfolio, generating a very important revenue stream to support City services. The administration of the portfolio adheres to the City’s investment policy, which complies with Community Charter requirements. The policy outlines how City funds are to be invested in a manner which will allow for reasonable returns and security while meeting the City’s cash flow requirements. The average portfolio balance related to the City’s investments during 2019 was $924.2 million ($816.8 million in 2018). During 2019 the City earned $28.6 million from investment income ($22.6 million in 2018) of which $1.8 million was earned specifically for deferred development cost charges ($0.8 million in 2018). The average rate of return during 2019 on the City’s investment portfolio was 2.66% (2.40% in 2018). capital programs, amount to $57.5 million at the end of 2019 compared to a balance of $86.2 million at the end of 2018. This decrease is mainly due to increases in the use of internal borrowings to fund capital programs during 2019. The deferred development cost charge balance at the end of 2019 was $308.5 million, which is an increase over the balance of $277.7 million at the end of 2018. This is a reflection of the City’s steady development activity. These funds will be used to fund capital projects that are listed in the City’s Five-Year (2020-2024) Financial Plan. Reserve Funds The City’s statutory reserve funds, net of internal borrowings to fund

CONSOLIDATED STATEMENT OF FINANCIAL POSITION For the year ended December 31 (amounts in $ millions)

2019 Actual

2018 Actual

Change

$ 1,163.3

Financial Assets

$ 1,111.6 $ 51.7

(1,124.5)

Liabilities

(1,048.8)

(75.7)

38.8

Net Financial Assets

62.8

(24.0) 313.1

9,295.7

Tangible Capital Assets

8,982.6

0.8 4.5

Inventories of Supplies

0.7 4.2

0.1 0.3

Prepaid Expenses

9,301.0

Non-Financial Assets Accumulated Surplus

8,987.5

313.5

$ 9,339.8

$ 9,050.3 $ 289.5

The financial position is calculated as financial assets less liabilities and results in either a net financial asset or a net financial debt. A net financial asset position is an indicator of the funds available for future expenditures, and a net financial debt position is an indicator of funds required to pay for past expenditures. In 2019, the City’s financial position decreased by $24.0 million resulting in a net financial asset position of $38.8 million. The City’s non-financial assets increased in 2019 by $313.5 million, bringing the total to just over $9.3 billion. The increase is the net result of capital additions of physical assets in the year, offset by disposals and amortization expense. The result of these increases in financial position and non-financial assets was accumulated surplus increasing in 2019 to $9.3 billion (2018 - $9.1 billion). Overall, the City continues to maintain a strong financial position.

CONSOLIDATED STATEMENT OF OPERATIONS For the year ended December 31 (amounts in $ millions)

2019 Actual

2018 Actual

Change

$ 1,131.9

Revenues

1,159.2 $ (27.3)

(842.4)

Expenses

(773.0)

(69.4)

$ 289.5

Annual Surplus

386.2 $ (96.7)

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