City lowers proposed tax hike to 2.8%
City staffers want to avoid a tax hike after budget goes up because of higher minimum wage
Your taxes won't go up as much as previously thought.
A city committee approved a plan for offsetting higher than expected Ontario minimum wage costs at deliberations at London city hall Monday.
City council learned at the end of October that the province's new minimum wage legislation — which will rise to $14 an hour on Jan. 1 — will add $1.4-million to the 2018 budget.
That pushed the projected property tax hike to 3.3 per cent, from the original target of 2.9 per cent.
But on Monday night councillors found a way to bring down the hike.
Among other things, they'll use $1.5 million in revenue from assessment growth, and apply $900,000 in savings from a rescinded tax break for property owners with empty buildings.
Together, that lowers the tax increase to 2.8 per cent, just below the target of 2.9 per cent.
Minimum wage hike could spike taxes
A number of councillors expressed concern in October about the impact on the budget and asked the administration to look for potential cuts in other areas.
The city employs more than 1,200 seasonal workers who earn the minimum wage, many of them in the parks and recreation department.
City Treasurer Anna Lisa Barbon told CBC News Monday that user fees in areas such as golf courses will help to recover some of the higher wage costs. But she said the city couldn't justify increasing user fees across the board.
"Obviously, there is a co-relation with respect to the amount of the user fees and what the participation rate is. So our feeling was that in order to increase the user fees for areas that we didn't feel the market could bear, that could have a detrimental impact."
As a result, the administration is recommending that the city offset the higher minimum wage costs with $1.5 million in revenue from the growing tax base. That would bring the city's 2018 tax increase down to 3 per cent, from 3.3 per cent.
What happens in 2019?
The new provincial minimum wage will also create budget pressures for the city in 2019. On Jan. 1, 2019, the wage will rise to $15 an hour, adding $2.2 million to city costs.
Barbon said staff haven't identified a specific solution for 2019, but she noted one option is for the politicians to defer some of strategic investments until 2020.
The treasurer notes there are 26 such investments, ranging from London's urban forestry strategy to the Thames Valley corridor plan to road safety and investments in infrastructure.