The City of St. John's approved its three-year 2016 budget Monday, bringing in higher property taxes and reduced city services.

Residential property taxes will increase by 12.7 per cent on average, while commercial property taxes will increase by 14.3 per cent.

The taxes are going up despite a drop in the mill rate, from 8.1 to 7.8 for residential properties and from 26.2 to 25.2 for commercial properties. The tax increases are due to a rise in property values since 2011.

"While we will see a slight increase in taxes for residents, if we had cut any deeper we would have gotten into core services," said Coun. Jonathan Galgay, chair of the finance committee.

Galgay said that if council had reduced city revenue any further, it would have had to consider bi-weekly garbage collection, reducing regional fire services, and not opening the new Paul Reynolds Community Centre, which Galgay said comes in at $45 million.

"As a growing city we had to ensure that we meet the need," he said.

"We've been able to ensure that we retain these core services, and I'm confident that the decisions that we've made will have a lesser impact on the general public."

In the 2016 assessment, average property values increased from 11 to 27 per cent. Seventy-six per cent of City revenue comes from property taxes.

Councillor Jonathan Galgay, chair of the City finance committee, said the city had to make some tough decisions in its 2016 budget, but that they've been able to retain core services. (Laura Howells/CBC)

The budget also includes an increase in the water tax, from a current rate of $615 a year to $630 in 2016, $670 in 2017 and $675 in 2018.

The city is also eliminating the half mill reduction for properties not connected to water or sewage services, many of which are in Goulds.

It is also eliminating the vacancy allowance for commercial property owners, starting in 2018.

"We have vacant buildings in the city, many of them have no intent, you see no lease signs on them," said Galgay.

"We're hearing from communities and neighbourhoods that they want the city to ensure that businesses either clean up, sell, or move on."

City cutting services, operating grants

The new budget is also cutting several services to save money. The city will no longer do water and sewage repairs on private properties in order to save $500,000 a year.

The city will also begin charging for previously free services, including cleaning up sewer backups, thawing frozen pipes, and video inspections. These fees could range from $50 to $500 depending on the job.

It is also cutting its bulk garbage collection services and eliminating the summer litter collection program. Galgay said that private businesses would be able to provide those services.

"Since we've undertaken the landfill site where you can load up your car and drop off, it makes it a lot easier for people," he said.

"It obviously comes at a cost, and this is just one of many areas that we just had to cut out."

The City of St. John's budget for 2016-2018 cuts some city services, including bulk garbage collection and water and sewer repairs on private properties. (Laura Howells/CBC)

The city is delaying automated garbage collection services that were set to roll out in the fall of 2016, to defer a $3.6 million payment.

It is also eliminating the annual $100,000 operating grant to the Aquarena, and reducing the grant to the Grand Concourse Authority.

Galgay said the city can cut the Aquarena funding because of the new community centre that will open in Wedgewood park in late 2016.

"With the Paul Reynolds Centre coming online in the very near future, we're able to provide those programs," he said.

Cuts to arts grants

The budget also cuts arts, tourism, and sports grants by 50 per cent, saving $1.17 million over the next three years.

"We will go back to staff, we will ask them to tighten up the application process and the criteria," said Galgay, who added that the grants application process will be reviewed early in the new year.

The new budget also suspends the city's annual art procurement fund of $20,000 until 2018, but does allocate $300,000 for local art for the renovated Convention Centre.

"These were not easy decisions for council to make, but we're fairly confident that they're fiscally responsible decisions," said Galgay.

In addition, the city is looking at turning over the programming and operations of the Shea Heights Community Centre and the Buckmaster's Circle Recreation Centre to the community, while providing an annual operating grant.

"It's certainly not going to be a turn-key situation where we're going to walk away January first and leave it to them," said Galgay,

"But we feel that the neighbourhood has a lot to offer and that they should have the opportunity to work with council and take these facilities on, to ensure that they can provide the programming and services they've been longing for."

The city is also saving $8.4 million over three years by offering early retirement to some city staff and reallocating human resources within departments.

The city is still following through on its revitalization plan for Victoria Park, scheduled to begin in the spring of 2016.

It is also still funding construction of the Kenmount Terrace Community Park, set to be finished in 2019, as well as the new pool house for Bowring Park, to be completed in 2016.

The city is also building a $42 million new "multi purpose leisure space" to replace the H.G.R. Mews Community Centre.

City expenditures are expected to increase by $12.7 million in 2016, $20.7 million in 2017, and $26.9 million in 2018.

This is due largely to collective agreement salary increases, as well as 2016 and 2018 debt charges, increased contribution to capital from HST savings, and an increase in the Go Bus system.

The budget passed by a vote of seven to three, with councillors Art Puddister, Dave Lane and Sandy Hickman voting against it.