Mount Pearl city council lowered its tax rate Tuesday evening while paving the way for the largest budget in its history.

Council approved a residential tax rate cut of 1.5 mills, steeper than similar cuts in neighbouring St. John's and in Newfoundland and Labrador's other city, Corner Brook.

Mount Pearl Mayor Steve Kent says lower borrowing costs will free up cash for other needs.
(CBC)

Mayor Steve Kent said the city's $28-million budget will be balanced because of higher property assessments and growth in the city. Kent added borrowing 2007 is expected to come in at one of the city's lowest levels in years.

"We believe in living within our means and we'll borrow only absolutely what is necessary," Kent said.

"The fact that we've been able to reduce our debt is significant and it frees up funds to take on large capital projects that are on the horizon over the next number of years."

The city is dropping the commercial tax rate by one mill.

The mill rate is the tax paid per dollar of assessed value of property, with one mill equal to $1 per $1,000 of assessed value.

In St. John's, the residential tax rate was cut last week by 1.2 mills, while Corner Brook lowered its rate on Monday night by 1.25 mills.

Kent said Mount Pearl will spend almost $4 million on capital projects next year, although he admits the amount is only half of what is needed.

Mount Pearl has also increased its property tax discount to low-income seniors from 15 per cent to 20 per cent.