Get ready for tax hike, outgoing Andy warns

The departing mayor of St. John's is warning his successor, and those who will vote in a spring byelection, that a tax hike may be inevitable.

"Taxes are going to go up," Andy Wells told CBC News, describing financial projections that show the city will run a deficit in 2009 even without changing anything that it does.

The city is facing several financial challenges, including a sewage treatment facility that is being built near St. John's Harbour, but which is at least $20 million overbudget. Fuel prices are increasing, the cost of subsidizing the controversial Mile One Centre has climbed to $2 million per year and snowclearing costs now top $12 million per year.

Although the city collects about $170 million each year from taxpayers, Wells said the math for next year's budget looks daunting.
  
"It's going to be very difficult — and I have no answer to it. I wish I did," said Wells, who announced on Monday he will be leaving the mayor's post on March 3, to assume a full-time job running Newfoundland and Labrador's Public Utilities Board. 

"It's going to be so difficult to control expenses," Wells said.

To pass this year's budget, councillors came within a whisker of cutting subsidies to some popular services, including the Aquarena sports centre.

Coun. Tom Hann said the situation will not likely improve as the year progresses.

"Given the situation, if we did absolutely nothing else above and beyond what we are doing now, we will look at a $1.5-$1.6-million deficit next year," Hann said.

But Deputy Mayor Dennis O'Keefe, who will be running for mayor in a byelection expected to be scheduled for early June, said he is not convinced Wells is right.

"That's his opinion," O'Keefe said.

"Council will have to look at the situation when we do our budget. My opinion right now as chair of finance is that we still have along way to go [to see] how things will pan out in our 2008 meetings," he said.

Wells said his outgoing advice to council is simple: no new services, and no more spending than necessary on existing programs.