What’s behind the big tax hike proposed in London’s 2023 draft city budget?

It may cost a lot more to live in London, Ont. next year.

On Tuesday, city council will officially table the 2023 draft budget update with a 3.9 per cent increase to the property tax rate.

Budget deliberations in early next year are the final annual update to the 2020 - 2023 multi-year budget approved by the previous city council.

The previous approved tax rate increase in 2023 is 3.9 per cent, but a staff report explains, “Should municipal council approve the recommended budget amendments, the 2023 increase from rates would decrease to 3.2 per cent.”

City council will also have the option to consider additional budget amendments, which are not expressly recommended by civic administration.

“The lowest we could potentially come in is 2.9 per cent if all of the staff recommended and ‘for (council) consideration’ amendments come through, but I question if they all will come through,” explained Budget Chair Elizabeth Peloza.

The impact on the tax bill of the average London home (valued at $241,000 in 2019) would be:

The tax rate increas versus increase dolar value is as follows:

• 3.9 per cent — $122 (No amendments)
• 3.2 per cent — $100 (Staff amendments)
• 2.9 per cent — $92 (All amendments)

Proposed 2023 tax rate increases on average home in London, Ont. (CTV)

Though house values have surged in recent years, city hall uses the 2019 average assessed value of homes to permit year-to-year comparisons during the four-year budget.

Council will consider 18 budget amendments during budget deliberations.

Recommended by staff:

• Budget savings found by municipal departments (- $6,581,000)
• Ontario works - reduction in required investments (- $1,030,000)
• Roadmap to 3,000 affordable units – portable benefits & staff (+ $1,794,000)
• Youth opportunity unlimited core street cleaning (+ $200,000)
• Cybersecurity infrastructure at city hall (+ $1,009,000)
• 1001 inventions exhibit (reserve funds)
• Land ambulance – additional resources (assessment growth funds)
• Changes to transportation capital growth project budgets (capital budget funds)
• Regeneration of public housing (future debt)

Additional for consideration:

• Reduction to streetlights, winter maintenance, and walkway maintenance (- $936,000)
• Reduction in horticulture aesthetics (- $200,000)
• Reduction to neighbourhood playground program locations (- $250,000)
• Eliminate printing of council agenda materials (- $8,000)
• Humane Society of London & Middlesex animal campus (reserve funds)
• Increase to neighbourhood decision-making program (+ $250,000)
• Funding for the Hamilton Road BIA (+ $100,000)
• Reduction to previously approved infrastructure gap contribution (- $950,000)
• Streetscape master plan for Argyle BIA (reserve fund)

Overview of proposed 2023 property tax changes. (Source: City of London)

Meanwhile, inflationary pressures affecting local households and businesses are not yet influencing the finances at city hall to a degree that would require tax increase.

“While some pockets of inflationary pressure have been noted, they are currently being managed through offsetting savings in the overall city budget,” reads the budget report. “There is the potential for further pressures to be experienced by the city into the future as certain goods and services purchased through established contracts will come up for renewal.”

Coun. Peloza warns inflationary pressures may be delayed but not avoided, and told CTV News London, “What we need to keep a close eye on is as the multi-year contracts we [have suppliers] bid on come up for renewal, is that when those suppliers pass on their cost increases?”

The 2023 annual budget update proposes $1.1 billion in operating expenditures, covered by property taxes ($722.5 million) and non-tax revenues ($382.6 million).

On Tuesday, city council members will officially receive their draft budget documents.

The public can provide comment on the budget during a meeting of the Strategic Priorities and Policy Committee on Jan. 17.

The budget will be finalized by council on Feb. 14.