Draft city budget starts with 4.9% tax increase, with millions more in asks on the table

Londoners can expect a property tax increase averaging well above five per cent over the next four years after staff released a draft budget on Monday. 

Just to maintain the current level of services, staff say a tax levy increase averaging 4.9 per cent over the next four years will be needed. That increase represents an extra $125 a year for a house with an assessed value of $250,000, based on provincial evaluations last updated in 2016. 

The base increase is due mainly to inflation driving up everything from the cost of borrowing to the price of construction materials for city projects. 

However, that's just the start of the potential increases London property taxpayers could be facing — with millions more in optional budget asks on the table. 

Also in the draft budget are 87 budget adjustments call "business cases," with millions of dollars in extra spending for council to consider (though a few business cases include reductions). If all those are approved — an unlikely scenario — it will add another 4.1 per cent to the average annual tax increase, leaving Londoners staring down a potential nine per cent rise over four years. 

Spending hot spots

Coun. Elizabeth Peloza, the city's budget chief, said city finances are being affected by the same inflation pressures that are driving up everyday costs for Canadians. 

"You've seen the cost-of-living increase in your groceries and other things and it's been the same cost pressures here at the city. As we've drawn down on reserve funds, there comes a time to make decisions, " she said. 

The budget will be hashed out by council over the next few months, with the final budget due to be approved in early March. 

You can read all of the draft budget here.

Council facing millions in budget add-ons

Some of proposed new budget asks are baked into recently-enacted provincial legislation and can't be avoided — for example, a $22 million revenue reduction due to new provincial exemptions to the fees the city charges developers.

Also unavoidable almost $12 million to cover police costs of shifting to a new 911 system and $7 million to cover tighter timeline requirements for approving building applications. London's new green bin program will cost $4.7 million in combined capital and operating costs. 

Other budget extras have been prioritized by city administration, including $10 million to replace fire vehicles. 

There's also a $11.4 million to upgrade "major systems" at the city hall building, which is now more than 50 years old.  

One of the largest budget add-ons requests comes from London Transit, seeking $42 million to enhance service and transition to more zero-emission buses. 

Cost overruns on large infrastructure projects play a significant part in the extra budget asks. The three legs of the city's  bus rapid transit plan need $24 million, plus annual financing costs of $4.8 million. The planned widening of Wharncliffe Road South at the CN Rail bridge requires just under $40 million more because the costs have jumped significantly since it was first costed out in 2018. 

A business case also calls for $45 million to implement the city's climate emergency action plan.

The police requests on this budget are significant, including $81 million to enhance police office and training facilities, an ask that will include $17 million in operating revenue. 

London's public library is seeking $24 million to cover repair costs for its 16 branches. The library is also asking for $410,000 over the four-year budget to hire a mental health transitional case worker to work at the downtown branch and $250,000 to upgrade security. The library also wants $200,000 for anti-racism, and oppression programs. 

Councillors will begin digging into the budget in earnest on Jan. 29, with the first public meeting of the budget committee, following by regular meetings in February. The city will also host seven public engagement sessions in January at community centres across the city, along with city hall. 

New this year: A mayor's budget

There's an added wrinkle to this year's budget process — strong mayor powers. New probincial legislation gives mayors of Ontario's 46 largest cities, including London, the power to introduce their own budget, one separate from the one prepared by city staff. 

The approval process of a mayor's budget is complex, but essentially Mayor Josh Morgan can introduce his own budget by Feb. 1. Council then has 30 days to amend the mayor's budget but the mayor also has 10 days to veto those council amendments. 

Council can override the mayor's veto with a two-thirds majority. 

Morgan has directed staff to follow the previous budget process in accordance with the city's strategic plan.