Thursday, January 22, 2004

City hall proposes 10.4 % tax hike

A home assessed at $138,000 would face another $224 in taxes, water and sewer fees.

JOE BELANGER, Free Press City Hall Reporter 2004-01-22 03:33:12

Londoners face a property tax hike of 10.4 per cent and the prospect of fewer firefighters on the city payroll. But the bad news in the city's proposed 2004 budget tabled yesterday at a board of control meeting doesn't stop there.

Staff also are calling for a 9.7-per-cent increase in the sewer rate and a three-per-cent jump in the water rate.

It adds up to an increase of $224 on the property tax, sewer and water bills for an average home assessed at $138,000.

The city's budget chief warned councillors must be prepared to make tough decisions next month when they begin reviewing the city's proposed 2004 operating and capital budget of $731 million.

"There's not a lot of wiggle room," Deputy Mayor Tom Gosnell said yesterday.

The elimination of 19 firefighting jobs is one of the most controversial measures in the budget.

The city plans to cut another 40 jobs in other departments to save $2.3 million, Vic Cote, acting general manager of finance, said at a news conference after controllers met.

Gosnell warned councillors must take dramatic steps in the coming weeks to have any hope of avoiding a staff projection of tax hikes totalling more than 12 per cent in the next two years.

"We have tough decisions to make so our legacy in three years is of a council that got our financial house in order."

Controllers agreed to explore a range of initiatives to get the city's finances in check, including negotiating with the province and Ottawa and selling assets.

However, Gosnell advised that none will ease the pain of 2004. "It will be pretty hard to affect any significant changes to the 2004 budget," he said.

Instead, Gosnell urged his colleagues to look to the future to decide what to cut.

"If we want to meet our future targets (tax increases of 2.5 the next two years), then there will have to be very significant service cuts."

The budget of $731 million includes all boards and commissions asked to bring in budgets 1.2 per cent lower than 2003.

The tax increase is needed to support a 7.1 per cent spending increase of $40.4 million in the operations budget, which brings the total operating budget, including water and sewers, to $612.1 million from last year's $571.7 million.

Reasons for the increase were few, but significant -- personnel commitments (collective agreements, contracts and staff changes), additional debt servicing costs and downloading from the province, such as new social housing requirements and public health issues.

A key expense to London and all municipalities is renewed contributions of $9 million (or three per cent of the spending increase) to the OMERS pension plan after two-year holiday.

The city's debt servicing costs increased $3.7 million this year, representing about 1.2 per cent of the total budget increase. Debt servicing costs the city 4.5 per cent of its total budget.

Mayor Anne Marie DeCicco agreed with Gosnell that the city must explore new sources of revenue, including an industrial land strategy to increase assessment.

She was unapologetic for the increased debt load and resulting service charges, saying expenditures such as the John Labatt Centre, Central Library and new arenas are crucial to the city's quality of life -- a "major" factor in attracting new industry.

"And I want to caution council and the community that if we gut the system now, we're going to be right back where we were three or four years ago. We'd have to do a lot of cutting to bring down (the projected tax hike), but there's also a cost to doing that."

That didn't sit well with newcomer Coun. Paul Van Meerbergen.

"We've got to look at everything," Van Meerbergen said. "Clearly, a 10.4 per cent tax hike is not going to increase our assessment growth."

"This is a made-in-London problem -- you can't blame it all on downloading -- and it's going to require a made-in-London solution."

About the only comfort to come out of yesterday's draft budget presentation was provided Cote, acting director of finance, noting Hamilton's draft budget calls for a 13 per cent tax increase and St. Catharines', 10 per cent hike.

The final budget is to be approved by council March 9.


How the city plans to increase revenues and cut spending:

- Negotiate with the province and Ottawa for a new deal, including a share of fuel tax.

- Reach a new deal with the province on downloading services, which accounts for an estimated 20 per cent of the tax hike, much of it due to new standards.

- Explore selling or leasing assets to increase revenues.

- Focus more effort and money on zoning and servicing industrial land to attract industry and increase revenues from growth.


Deputy Mayor Tom Gosnell, London's budget chief, warns council will be hard-pressed to make major cuts next month to the draft budget, which calls for a 10.4-per-cent tax hike. Where would you cut spending to keep the increase down?

- Protective services (such as police and fire)?

- Recreation (such as arenas and parks)?

- Transportation (LTC)?

- General services (such as garbage pickup and snow removal)?

- Other?

Call us with your suggestions at 667-4578 (leave your name and a number at which you can be reached), e-mail us at or make your suggestions online at The Free Press will publish a cross-section of responses in the coming days.

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