As I watch city finance director Kris Dalio pace in front of the council chambers, pointer occasionally tapping against his detailed slides, one thing becomes abundantly clear – Prince George’s financial situation is more complex than the simple “surplus” headline suggests.
“What we’re looking at is a projected operating surplus of $2.1 million for 2023,” Dalio explains, his voice carrying across the half-filled chamber where I count barely two dozen residents attending this crucial budget presentation. “But context matters tremendously here.”
Indeed it does. While Prince George taxpayers might initially celebrate the news of extra funds, Dalio’s presentation Tuesday evening carefully unpacked both the origins and limitations of this financial cushion.
The surplus represents roughly 1.4 percent of the city’s $150 million operating budget – a margin that Dalio characterizes as “prudent financial management rather than excessive taxation.” The finance director attributed the surplus to several factors, including staff vacancies that went unfilled through portions of the year and higher-than-anticipated investment returns during a period of elevated interest rates.
“We saw approximately $800,000 in savings from positions that remained vacant longer than expected,” Dalio noted. “Another $650,000 came from investment income exceeding our conservative projections, while the remaining came from operational efficiencies and slightly higher than anticipated revenues from recreation facilities.”
Mayor Simon Yu, who campaigned partially on fiscal responsibility, appeared pleased but measured in his response. “This demonstrates responsible stewardship of taxpayer dollars, but we shouldn’t misinterpret this as having excess cash to spend freely,” Yu cautioned when I spoke with him after the presentation.
The city’s cautious approach makes sense when examining provincial trends. According to the BC Municipal Affairs annual financial reporting, municipalities operating with extremely tight margins often face difficult service cuts when unexpected expenses arise. The province recommends maintaining modest operational surpluses as financial best practice.
Councillor Trudy Klein raised the question many residents had been asking on community forums: “Will this surplus translate to tax relief for residents in the upcoming year?”
Dalio’s answer revealed the limitations of the surplus funds. “One-time surpluses cannot sustainably reduce ongoing tax requirements,” he explained. “Using one-time funds to artificially suppress tax rates creates a financial cliff in subsequent years when those funds are no longer available.”
Instead, staff recommended allocating the surplus toward several areas of need: $800,000 for the city’s infrastructure replacement reserve, $500,000 toward snow clearing equipment replacement, $400,000 for facility maintenance projects previously deferred, and $400,000 into the general capital reserve.
Local business owner Marcus Thomson, who attended the meeting, expressed mixed feelings afterward. “I appreciate the city ending up in the black rather than the red, but as a small business owner still recovering from pandemic impacts, it’s tough watching any surplus go into reserves when we’re facing another tax increase next year.”
The allocation recommendation sparks an important community conversation about priorities. According to the Canadian Federation of Independent Business’s municipal spending report card, Prince George has maintained spending growth slightly below the provincial average over the past five years, earning a “B” rating for fiscal restraint.
When I pressed Dalio on whether the surplus might indicate overtaxation, he pushed back firmly. “Our budget projections must be conservative by their very nature. We’re planning for essential services that cannot be interrupted – snow removal, emergency services, water treatment. Ending slightly positive is far preferable to ending negative, which would require immediate service cuts.”
Council will vote on the surplus allocation recommendations at their next meeting on February 12th. While the presentation focused on 2023 results, it provides important context for the upcoming 2024 budget deliberations scheduled to begin in March.
Longtime resident Eleanor Michaels, who I spoke with as she was leaving the presentation, perhaps summarized the community sentiment best: “I don’t mind them saving for a rainy day – we’ve certainly had enough budget shortfalls in years past. But they need to remember that for many families in Prince George, it’s already pouring financially.”
As Prince George continues navigating post-pandemic economic recovery, provincial downloading of costs, and inflation pressures, how the city handles this modest financial cushion will reveal much about its priorities and long-term fiscal planning approach.
The prudent management of today’s surplus may well determine whether next year’s budget discussions focus on opportunity or austerity – a delicate balance that has defined Prince George’s fiscal conversations for generations.
