A property tax increase of less than four per cent in 2010 – or about $85 more on a $500,000 home – is the objective of Abbotsford city council, despite concerns that it could force significant service cuts.

Council will consider the implications of a 3.9 per cent tax increase at its meeting on Dec. 14, after deciding on Monday that a staff proposal for a hike just under six per cent is too high.

Staff had already pared down their numbers from an initial pitch of 11.9 per cent. With expenditure up and income down at city hall, staff had said that figure was needed to maintain “status quo” city, police and fire services.

Having crunched the numbers further, staff came up with a 5.98 per cent tax boost, with 2.3 per cent for police and 2.7 per cent for other city services including fire. The remaining one per cent would be spent on replenishing capital reserves.

Each one per cent tax increase generates $968,000 for the city.

Coun. John Smith called on staff to target 3.9 per cent.

“I think there are further efficiencies to be had. That’s the maximum I am prepared to consider,” he said.

Smith’s proposal would see two per cent of the tax increase go to police, with 1.9 per cent being allocated to other city services. There would be no additional money for capital reserves. (Initially, staff were proposing a two per cent capital levy to be included in the total tax increase.)

The majority of council supported the motion, however, Mayor George Peary did not. Peary, who last week suggested there would likely be a 2010 property tax increase of approximately five per cent, warned of significant service cuts should council settle on less than four per cent.

“If you think going from 5.98 per cent to 3.9 per cent is not going to have an affect on our citizens, you are daydreaming,” said Peary. “We will impact services, no question. These are challenging times.”

City finance staff are each year legally obligated to create a five-year financial plan as part of the budget deliberations.

Even at six per cent next year, staff predicted a nine per cent property tax increase in 2011, and further increases of 3.5, 3.2 and three per cent in the following three years.

Staff will now consider what cuts to make to the 2010 budget, and the results will be reported to council on Dec. 14, for final approval in January. According to the city, a one per cent property tax increase adds $4.25 to a residential property tax bill, for each $100,000 of a home’s assessed value. For a business, that number is $12.50 per $100,000.

The city is also predicting that rates for utilities, which are paid in addition to property taxes, will increase in 2010.

For water use, according to city finance staff, the rate is expected to increase to $0.94 per cubic metre in 2010 and $1.02 in 2011. That is higher than the $0.78 rate in 2008 and $0.86 in 2009. For a typical Abbotsford home, staff say the water bill for 2010 will be $306 compared to $280 in 2009.

The sanitary and sewer use, the rate is expected to increase to $0.76 per cubic metre in 2010 and $0.84 in 2011, That is higher than the $0.60 in 2008 and $0.68 in 2009, and will mean an average bill in 2010 of $223 compared to $199 in 2009.

Solid waste collection fees are also expected to increase, from an average $174 for 2009 to a proposed $205 in 2010.