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Photo by Jason Payne / PNG

By regulation, a B.C. municipality cannot take on debt that would require it to spend more than 25 per cent of its budget on debt servicing, said Sean Grant, director of local government finance at the ministry.

“It’s really based on the revenue-generating capacity of a government and how much of that can be used for long-term debt,” Grant said.

And 25 per cent was set as a fair limit, which is not dissimilar to a guideline for how much a household should spend on its mortgage while still being able to pay its other bills.

The ministry will make exceptions when a municipality needs to borrow money in an emergency, such as for flood mitigation, or to fix problems with core public-health services such as water or sewers, Grant said.

Generally, however, the ministry enforces the limit by requiring that all municipal borrowing bylaws be approved by its inspector of municipalities, Grant said. Any borrowing that would exceed the legal limit can be denied.

On that basis, despite McCallum’s alarm, Surrey spent $23.5 million on debt-servicing costs in 2017 on $267.3 million in long-term debt, just 14 per cent of its provincially prescribed limit.

And based on revenue of $711 million, Surrey could have spent up to $178 million on debt-servicing costs before hitting its limit.

“To keep it in perspective, most local governments operate well below the 25-per-cent limit,” Grant said. “It is an absolute.”

Some municipalities come closer than others, and the amount can vary widely from year to year, according to an analysis of the Ministry of Municipal Affairs’ figures by Postmedia.