Whitehorse residents may have to pay more property taxes next year, as part of Mayor Bev Buckway's budget address delivered Monday evening at city hall.

The 2008 budget will include a proposed "7.5 per cent tax increase for 2008, and then a projected four per cent increase in 2009, 2010," Buckway said.

The address received first reading Monday night. It must still go before a public hearing, scheduled for Jan. 14 at city hall.

She said the tax hike is necessary to maintain city buildings and infrastructure, such as the Canada Games Centre. Such expenses are expected to rise by $9.5 million next year, Buckway said.

Furthermore, from January 2008 until 2011, the city's capital budget is projected to be just under $100 million.

Council had originally proposed a tax hike of at least 10 per cent, but it was reduced to 7.5 per cent. The last tax increase was last year, by five per cent. During her budget speech last year, Buckway said a further tax increase would not be necessary. But on Monday, she said things change.

"This budget, this time around, just in order to keep pace with things … we are looking at over five per cent, and then the addition, the additional percentage to enable us to actually do some new things," she said.

'Bite the bullet and do it,' councillor says

Whitehorse residents did not see their property taxes rise from about 1991 to 2000, when they inceased by only two per cent. Coun. Florence Roberts said she and other residents have been "pretty lucky" to have gone that long without paying more in taxes, but she agreed with Buckway that a tax hike is needed now.

"This is where it's time to bite the bullet and do it," Roberts said. "If you want service, you're going to have to pay for it."

The city also wants to increase transit fares from $2 to $2.50, but at the same time boost service by introducing a downtown loop on a six-month trial basis. The transit loop would connect the downtown with Yukon College, the Canada Games Centre and the Chilkoot Centre.

Projects mentioned in the the budget address include:

• Replace the fire hall on Two Mile Hill: $9 million. 
• Replace the Municipal Services Building in 2011: $16 million. 
• Expand the Grey Mountain Cemetery, just over $1 million.
• Develop new city trails, $340,000. 

Faced with a rising demand for housing — council expects Whitehorse's population to grow by nearly nine per cent next year — the city wants to spend more than $4 million to develop the Motorways and Stan McCowan Arena properties to accommodate a mix of residential and commercial buildings.

The Yukon government will also be giving about $400,000 more per year to the city in its municipal assistance grant. At the end of five years, the city will receive a total of $7 million annually from the territorial government.

About 60 per cent of that money will go into the city's capital budget, and the remaining 40 per cent to its operating budget.

As well, Buckway said, gas tax revenues totalling $45 million will be used to repair and update infrastructure.