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A budget battle is brewing at city hall as the treasurer begins work on the next multi-year budget.

Council is being asked to set the average annual tax increase target for the 2020-2023 budget, but Ward 6 Councillor Phil Squire is already balking at the amount.

“They are coming to us basically asking us to endorse something that guarantees a pretty hefty tax increase,” he says.

In a new report, the city treasurer estimates that to maintain existing service levels, taxes must rise on average 2.2 per cent each year, but recommends a 2.7 per cent increase to allow council to consider some new initiatives.

A 2.7 per cent tax increase is about $82 more each year for the average London home accessed at $241,000.

Squire says, “This would affect the people most vulnerable in our city, people who own houses, barely hanging onto them. People who rent, that go up because of increased taxes.”

He suggests reviewing service levels might drive down the 2.2 per cent hike to cover inflation.

Councillor Josh Morgan will lead next year's budget process.

“If we want to drive it lower than that, staff need to know that early on so they can make sure the engagements are done and decisions are brought back to us.”

To achieve city council’s newly minted strategic plan over four years, taxes would have to rise on average 3.2 per cent per year.

Morgan believes the timeline to accomplish the strategic plan is flexible, “The strategic plan was always going to be paced in a way that made sense from a financial perspective. That means it does not all have to crammed into four years.”

During last year's mayoral campaign, now Mayor Ed Holder told CTV News that tax increases should be in line with inflation.

At his campaign launch he said, “We certainly wouldn't support anything that goes beyond the rate of inflation. I think that to suggest zero is irresponsible, to suggest anything beyond that is unaffordable.”

Squire has panned multi-year budgeting - calling it an additive process that limits council's ability to make substantial changes once it is set in motion.

He believes the targets set now will significantly influence tax increases through 2023.

“I'm not just going to rubber stamp these kind of increases, nor will I do this next week. I need to hope that other councillors are of the same mind.”

City hall’s Strategic Priorities and Policy Committee will discuss the tax targets on Monday.