Here's what London's budget increase could mean for your tax bill

If you haven't followed every twist and turn in the city's budget discussion, you're forgiven.

It's a lot of numbers. It can be confusing. You're busy. We get it. 

But whether you've been reading every budget story or not, here's a single takeaway you can bet on: London's property taxes are going up by north of five per cent in each of the next four years. What's still to be decided is exactly how much the increase will be and which requests for extra funding will be covered when the final numbers are approved by council in March.

But what will this add up to in actual dollars at a time when Londoners are already dealing with higher prices on everything from gas to groceries?

To help us crunch the numbers, we turned to Londoner Kendrick Blancher, a sales representative with House Sigma brokerage in London. He often posts on his YouTube channel about the local real estate market. He's also done a video about how property taxes work. 

"If people don't understand the difference between assessed value and market value, these numbers can look quite scary to look at, " he said.  

When it comes to determining a house's property tax, it's the assessed value that's used, not the market value.

Those assessments are done about every four years by the Municipal Property Assessment Corporation (MPAC) and Blancher said the assessed value is typically less than half a home's market value.

So here's how he ran the numbers.

First, Blancher took three possible property tax increases in each of the next four years as benchmarks:

• 4.9 per cent This is what city staff say is needed to maintain existing services. In other words status quo, no new spending.There's no way the yearly increase is going to be lower than this. Sorry London.
   
• 7.4 per cent This is what Mayor Josh Morgan is proposing in his budget, which puts a big emphasis on policing, with a lot of other extra budget requests being turned down. 
   
• 10 per cent Based on what the mayor and councillors are saying, it would appear that this is about the maximum property tax increase that could get enough political support to pass. But double digits is still possible. Consider that Toronto Mayor Olivia Chow just dropped her recommended budget increase to 9.5 per cent, down from the 10.5 per cent recommended by staff. 

The table below shows how much each of these percentage increases would cost a typical London homeowner.

This data is based on actual properties Blancher has reviewed. We kept the addresses out and rounded out the market value based on a recent sale price to preserve owners' privacy.

What homeowners say

Cathy Trocchi owns two north London properties. She rents one out to her daughter at below market value as a way to help her afford a decent place to live. Trocchi is retired and in good financial shape, something she's grateful for, but said a higher tax bill means she has to spend less somewhere else. 

"I don't have a means of increasing how much money I get," she said about property tax increases that could easily cost her an extra $1,000 a year. "It means that I have to make tough decisions about how I spend my money." 

Trocchi has been paying attention to the discussion about the police request for more money, which is the single largest driver on the city's upward budget pressure. She doesn't want council to just approve an increase for police without applying some scrutiny and consider new approaches to keeping costs down. 

"I will happily support the mayor and city council and do my share, but I also say 'Don't just accept that nothing else can be done because that's the always the way we've done it,'" she said. 

Prab Gill is licensed paralegal, a father of two and a homeowner concerned about his growing tax bill. A 7.4 per cent increase the mayor is proposing would cost him about $350 a year. 

"It's really frustrating," said Gill, who also ran for city council in 2022. "It's costing every person, every family financial hardship because all your basic necessities have gone up. I'm going through the same financial hardship that every Londoner is and this is going to add to that." 

How does this compare to other cities?

It's worth pointing to the following graphic, which the city's budget staff shared in a presentation when the budget process began in December.

It shows London's tax rate at the lower end of Canadian cities with a population of 100,000 or above. 

The budget consultation continues through this month. The final budget is due to get full approval from council in March.