City council has approved a residential property tax increase of 2.75 per cent.

The total property tax increase — which includes a previously-approved 0.5 per cent levy to pay for the Scarborough subway — becomes 3.2 per cent with adjustments for the current value of properties. That hike is equivalent to an annual increase of $83 for the average household.

A majority of councillors voted Tuesday to approve the increase recommended by the budget committee and Mayor John Tory (open John Tory's policard)’s executive committee.

A few councillors offered a different number on the floor of the council chamber: Councillor Gord Perks (open Gord Perks's policard) wanted to raise taxes even further to stop the city from needing to borrow from itself to balance the budget. Councillor Rob Ford (open Rob Ford's policard) asked council to raise property taxes only a total of 1.99 per cent. And Councillor Giorgio Mammoliti (open Giorgio Mammoliti's policard) went in the opposite direction, asking that property taxes be reduced a total 3.2 per cent.

In the end, council voted 38-6 to stick with the original 3.2 per cent increase in the first finalized budget vote of the new term. Perks, Ford and Mammoliti all voted against that increase, along with Councillors Maria Augimeri (open Maria Augimeri's policard), Janet Davis (open Janet Davis's policard), Sarah Doucette (open Sarah Doucette's policard), Paula Fletcher (open Paula Fletcher's policard) and Anthony Perruzza (open Anthony Perruzza's policard).

Perks earlier argued that council was engaging in “wishful thinking” with a proposal to cover off an $86-million budget hole by borrowing internally. He pointed to pending cost overruns for the Union Station revitalization, pegged at $80 million, and the Spadina subway extension overruns, totalling some $400 million.

“I don’t know why, but they’re prepared to take a multi-billion-dollar gamble over the next couple of years. I’m not,” Perks said of those who might vote in favour of the 3.2 per cent increase.

Tory argued Tuesday that they were doing the “right thing” with that recommended increase, saying a majority of voters elected candidates with a mandate to keep taxes at or below the rate of inflation.

“There are a lot of people out there — seniors, young families and others — who are presently struggling,” Tory said, claiming there are some who can not afford to pay any more on their property tax bill.

Tory also argued the city needs to get its “own house in order,” citing some of the recent cost overruns. He said the city has to assure residents every dollar collected is being “well spent.”

Asked whether it makes financial sense to keep property taxes below inflation as the city faces mounting financial pressures extending to 2020, budget chief Councillor Gary Crawford (open Gary Crawford's policard) insisted it was.

“Keeping the tax rate as low as possible is good fiscal sense,” he said. Next year, the city will have to start a whole new process, he said. The current strategy to borrow money internally means the city must find ways to save $69.3 million next year. That number increases each year, to reach $160.6 million.

Most of the other councillor motions on property taxes were voted down.

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A motion to cancel the Scarborough subway tax from Perruzza — who has always voted in favour of a Scarborough subway — was ruled out of order by Speaker Frances Nunziata (open Frances Nunziata's policard).

A motion from Augimeri to automatically consider annual inflation for a program that allows low-income seniors to avoid increases in their property taxes passed, along with a motion from Doucette asking staff to review who should be eligible for that program.