Saint John city staff is recommending city council approve a 2014 budget that would keep the current property tax rate.

And city manager Patrick Woods told council Tuesday that if not for an unexpected loss of tax revenue from two Irving-owned pulp mills, the city could have made a "serious effort" at reducing taxes.

The city learned Dec. 2 that J.D. Irving has successfully appealed the tax assessments for its Irving Paper Ltd.  and Irving Pulp and Paper Ltd. mills.

That resulted in the city getting approximately $1.4 million less in tax revenue than anticipated, said Woods.

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Saint John Mayor Mel Norton and council are considering a 2014 budget that would hold the line on taxes. (CBC)

"If we hadn't got such a hit from the two pulp mills, could we have reduced taxes?" asked Coun. Gerry Lowe.

"I certainly would have made a serious effort at it," replied Woods at Tuesday's special council session to debate the 2014 budget.

The proposed budget of almost $149 million is only mariginally higher than the current year. It would allow the city to hold the line on the current tax rate of  $1.785 per $100 of assessed value of a property.

Mayor Mel Norton said expected increases in labour costs compound the city's budget challenge.

"Having increasing costs and not having increases in our assessment base, that makes it ultimately unsustainable," said Norton.

Wage increases for fire fighters and police officers put pressure on the budget.

Woods says when contract talks break down, the city is handcuffed by the arbitration process.

"In the protective services field, where the default provision is to go to an arbitrated wage settlement, in the rules for arbitration in New Brunswick, ability to pay is not a consideration," said Woods.

Saint John fire fighters won a 12 per cent pay increase through arbitration last year.

The city and its police department are currently in contract negotiations.

Woods is recommending that nearly $1-million be added to the police budget, with most of it meant to cover anticipated wage increases.

The proposed budget for road work is set to drop by $1.7 million.

Woods said the city will have to borrow the money to make up the difference.

"It's a temporary measure given the decline in the tax base," said Woods.

Councillors asked for more time to consider the proposed budget.

A final vote could take place on Monday.