Photo by Blackburn London London City Hall. (File photo by Blackburn Media)
London

$31M London budget surplus won't go toward tax break

Hopes that London will use part of a $31-million budget surplus to provide some tax relief for residents have been dashed.

City council has quashed a motion that would have seen $3.5-million of the surplus redirected toward a property tax cut next year. Councillor Corrine Rahman had pitched the idea, which was debated Tuesday.

"Let’s look at bringing down the tax burden in 2025 where possible," said Rahman, whose motion failed 9-5.

The money would have shaved 0.4 per cent off next year's projected 8.9 per cent tax hike.

Councillor Paul Van Meerbergen argued against using the surplus for a tax break.

“The use of one-time money with absolutely no guarantee or a reasonable amount of certainty that this is actually going to continue, is at best foolhardy," said Van Meerbergen. "Why it’s foolhardy is because you’re setting all taxpayers up for what I’ve described before as a budget bomb."

The majority of the surplus, $28-million, came from the 2023 property tax supported budget and the remaining $3-million was from the water budget. It is largely the result of three temporary, external factors including higher than anticipated interest rates, delays in MPAC property value reassessments, and delays in implementing the city's green bin program.

City staff warned council in a report that the surplus is unlikely to persist in the long-term. They recommended using roughly half of the extra cash to reduce debt and to put the other half into a pair of reserve funds in accordance with the council-approved surplus/deficit policy. This recommendation got the nod from council Tuesday.

"The surplus will be used to reduce future debt issuance and provide one-time contributions to the Capital Infrastructure Gap Reserve Fund and the Community Investment Reserve Fund in accordance with our policy," said Anna Lisa Barbon, Deputy City Manager of Finance Supports.

Approximately $14-million of the surplus is being allocated to help reduce the $330-million of additional property tax supported debt approved over the 2024-2033 timeframe in the 2024-2027 multi-year budget. Approximately $7-million will go into the Capital Infrastructure Gap Reserve Fund, which is used to address future infrastructure needs in the city. The other $7-million will go into the $200,000 Community Investment Reserve Fund, which can be used at the discretion of city council.

The $3-million water budget surplus will be allocated to water debt reduction and the Waterworks Reserve Fund to address future infrastructure needs, the city said.

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