Mayor pushes back against Stevenson’s pitches to further reduce tax rate increase in his 2026 Budget

The final budget debate at London City Hall will take place later this week, as Mayor Morgan proposes a 3.7 per cent property tax increase.

Just days before budget deliberations begin, arguments are already being made, for and against several business cases that could have a significant impact on the bottom line of property tax bills in 2026.

Coun. Susan Stevenson has submitted several proposed amendments to the mayor’s draft budget, including dipping into a reserve fund to lower the tax rate increase, and another that questions the fairness of asking London taxpayers to pay off a multi-million dollar debt incurred by the Middlesex-London Health Unit (MLHU).

On Monday, Stevenson told CTV News that she’s heard clearly from the public that the proposed 3.6 per cent tax rate increase included in the mayor’s draft budget is too high.

“They say that given the 16 per cent increase over the last two years, that they’re not willing to accept a 3.6 per cent (in 2026),” she explains.

So a proposed amendment would lower the tax increase by ONE additional percentage point by taking $8.8 million from a reserve account and committing to find the equivalent operational savings.

Stevenson’s amendment suggest the decision is an, “opportunity to lower the tax burden on struggling families and make the needed changes within the organization to ensure financial stability (without large future tax increases).”

“We have financial pressures coming. And how do we show the public that we’re not going to just put that tax burden on them in 2028? That we’re committed to finding those savings. What’s stopping us from looking at that early in 2026?” she adds.

Among its justifications, Stevenson’s proposed budget amendment cites the mayor’s use of $8.4 million from the 2024 Budget Surplus to reduce this year’s tax increase.

However, Morgan rejects the comparison and warns against the budget amendment.

“I’m not going to raid a reserve fund on a one-time basis to provide tax relief,” Morgan asserts. “That’s just not responsible or sustainable.”

Morgan emphasizes that his tax relief measure uses surplus dollars left over from a previous budget and includes a plan to find permanent funding sources by 2028 through debt reduction and annual service reviews of municipal departments.

“(Stevenson’s amendment) is back to what she attempted to do a couple of years ago, which is a one-time reduction by raiding a reserve fund that would have led to a tax increase this year. We would have started this year two per cent higher,” he adds.

Stevenson says she initially considered proposing a reduction greater than one per cent, but acknowledges she’s willing to be flexible during upcoming budget deliberations.

“If colleagues want to say, look, we don’t want to do the 1 per cent reduction, but we’re willing to dig deep into some long-term sustainable tax savings (and) we’re going to set up another budget committee for January to April and we’re going to show Londoners that we’re serious about this… I’m okay with that, too,” she says.

“That deep dive (into city spending) has been done,” the mayor says. “So if you’re going to find another cut of this magnitude, you’re probably going to look at one of the big three things in the budget. That’s public safety, housing, or transit. I’m just not prepared to cut any of those because we’re actually making progress in all of these areas.”

Meanwhile, Stevenson also plans to oppose repaying MLHU’s $2.4 million debt earlier than scheduled.

The debt stems from renovating and outfitting the health unit’s current location (in Citi Plaza) when it moved from 50 King St. in 2020.

She points out that the province is supposed to be responsible for paying 75 per cent of the health unit’s operating budget each year, but the City of London would be contributing the entire amount to retire the debt.

“If it were our loan, we would save all the interest. But we only pay 21 per cent of the (annual operating budget), so why would we pay 100 per cent of the loan?” Stevenson asks.

But Morgan points out that each year the MLHU must allocate $241,000 from its operating budget to loan repayment each year, and he isn’t willing to see important health services compromised.

According to a statement emailed from the health unit, “The $241,000 plus interest that is currently paying off the loan can be redirected to programs and services that directly impact the health and wellbeing of Londoners and the residents of Middlesex County. Those dollars represent a way to prevent further erosion of the services – keeping our residents healthier and safer. Middlesex County has included their portion in their 2026 budget.”

The MLHU statement also describes the impact of current funding levels.

“We are dangerously underfunded – in fact, we are the second-lowest funded health unit in the province on a per capita basis. We have already cut programs and services and reduced Public Health staff positions over the last 3 years. A total of 22.5 Full Time Equivalent positions have been lost. This means that our community is underserved for its size and receives fewer public health services than do neighbouring communities.”

Stevenson believes Londoners don’t want to pick up the province’s tab, “I think Londoners don’t want to pay more than their portion, particularly when it comes to the province. And we speak a lot about not allowing downloading (and) not to backfill the province. This is 70 to 75 per cent of $2 million. It’s a significant amount.”

Londoners can let Council know their thoughts about the draft budget during a Public Participation Meeting (PPM) on Tuesday afternoon.

Budget deliberations are will begin on Thursday, and continue on Friday (if necessary).