Intense debate preceded the passing of a five per cent property tax hike and an increase in user fees in this year's $41.3-million municipal operating and $16-million capital budget.

At their meeting Monday evening, members of city council passed the 2007 capital and operations budget with no opposition when the vote was called.

Prior to the vote, Coun. Doug Graham raised concerns the city is putting itself into a financial position where it's borrowing too much money.

Graham's comments were similar to those he told the Star last week when he said he is concerned the city is taking on too much debt.

'I keep asking, where's the money coming from?' Graham said last week.

The extra debt, he said Monday, means the city will have to raise taxes in the coming years.

Graham said plans to borrow $1.2 million for Takhini North work and $4 million for a new fire hall outlined in Mayor Bev Buckway's December budget speech, a $3.5-million commitment the city has to help fund the Hamilton Boulevard extension and reducing the amount of funding to capital reserves are all very concerning.

He also said he's worried the city will have to adjust its budget as it had in 2006 to make up for an underperforming Canada Games Centre.

In 2006, the city altered the budget by $1.6 million to make up for lower-than-expected revenues and higher-than-expected expenditures at the city's multiplex.

Graham said by borrowing money, the city will actually have even less operating money as funds the city used to earn in bank interest would disappear.

'It's a double whammy. We'll be borrowing and we'll be losing interest.'

The city, Graham said Monday, is not being honest with its citizens over how much things actually cost.

Coun. Dave Stockdale said he feels Graham is painting too dark a picture.

'We will be able to right the ship. This year is a bad year. I'm not full of doom and gloom,' he said.

Stockdale said the city's practice of putting more of the $5-million municipal grant from the Yukon government into the operating budget is not a cause for concern.

Traditionally, the city has split the municipal grant into a 60 per cent capital reserves and 40 per cent operating split.

Over the past few years, the city has been closer to a 50/50 split.

'Going from 60 per cent to 50 per cent I don't see as a major problem. I don't think it's a tragedy,' Stockdale said.

He doesn't feel the city's debt is reaching unmanageable levels, he added.

'You have to borrow money sometimes. For the city to borrow another $8.7 million is not a huge amount of money. I believe the city could go into debt for up to $50 million,' Stockdale said.

'When you build a house, you have to go to the bank and take out a mortgage.'

Stockdale said he felt the city is being honest.

'By saying we're not being honest tells us we're actually lying, and that's just not true,' said the 24-year councillor.

Buckway said she stands by the budget and the city's honesty.

'First of all, I think the city is in a very favourable condition. I think we have a sound budget,' she said.

The mayor said she believes the city has to look past the initial money it's taking to get the Games centre up and running and look into the future.

'I don't think for a little minute that we're misleading the public.'

The city's budget includes a five per cent tax hike, a three per cent rise in utility fees, a cut to the parks and recreation department budget and several capital projects.

According to the budget, some of the fees increases include:

a 1.5 per cent jump in all recreation fees effective September 2007;

a 10 per cent rise in park booking fees;

a hike of 10 per cent, $40, for burial plots;

a rise in cemetery interment fees of 10 per cent, or $120 per funeral;

a 10 per cent increase to leisure programs and events;

an introduction of a subdivision approval extension fee of $250;

an introduction of a road closure fee of $500;

a boost in the development permit fees, from $25 to $275; and

a seven per cent climb in tipping fees at the Whitehorse landfill.

As well, fines for parking infractions will jump from $10 to $25 with early payment going from $5 to $10 and after-court payment leaping from $25 to $50.

The city, according to the budget, will also be borrowing funds to pay for the construction of the new $5-million Two Mile Hill/Takhini fire hall.

'The city's total debt at Dec. 31, 2006 will only be $4 million, so the city is proposing an additional $4 million for Fire Hall No. 2 in 2007 and an additional $1.2 million for Takhini North,' Buckway said in last month's budget speech.

Other capital project funding plans for 2007 include:

$100,000 for a parking feasibility study;

$225,000, to be spent between 2007 and 2009, to bring the city's accounting practices in line with new national standards;

$230,000, to be spent in 2007 and 2008, for the construction of new elevators at the Mt. McIntrye Recreation Centre and city hall;

a new building at Shipyards Park for $1.06 million;

$2.4 million in waterfront development;

$440,000 in restoration costs for heritage buildings at Shipyards Park;

$300,000 in area development schemes;

$950,000 for downtown road reconstruction costs;

$700,000 for asphalt resurfacing;

$450,000 for Fourth Avenue bike lanes and streetscaping;

$800,000 for utilities work downtown;

$455,000 for new computers; and

$425,000 for a front-end loader.