An anticipated four per cent property tax increase is no longer an automatic for 2012, says the city's manager of finance.

Valerie Anderson explained this morning that city council has directed administration to try to bring the increase under the four per cent predicted last year in the city's three-year budget forecast.

Whether that can be done is another matter. It will be determined during the ongoing budget preparation work which is largely driven by the priorities of city council, she said.

Last year, Anderson pointed out, the requirement for a four per cent hike in revenue from property taxes included an estimated $400,000 to implement council's new transit strategy.

She said what she does know right now is the city's essential costs will be higher in 2012 than they were this year, with new labour contracts, the increase in the price of fuel, higher electricity costs, greater shipping expenses and so on.

"It is going to be hard seeing it come in much lower,” she said of the forecast for a four per cent increase in property tax revenue for 2012.

Growth, she explained, generates more money but also requires increases in services.

Mayor Bev Buckway is scheduled to lay out the 2012 capital budget at the coming Monday's meeting, though much of the operating budget is not usually finalized until into January.

At the past Monday night meeting, Coun. Dave Stockdale suggested that instead of amassing large reserve accounts, the city look at redirecting the money to lessen the anticipated tax increase.

Stockdale pointed out the city's rainy-day account to deal with unexpected water and sewer problems is fairly healthy – $3.4 million.

Anderson pointed out while the reserve may appear robust, when issues arise with the water and sewer system, they're generally very expensive to address.

Council was also reminded by the chief financial officer that under its own bylaws, the city must make annual contributions to its reserve accounts.

Coun. Kirk Cameron, attending his first meeting Monday following his successful run in last Thursday's byelection, said he supported Stockdale's point of view in finding any opportunity to offset tax increases.

Council was told Monday the city is on track to finish the year with a $14,000 surplus, after it took measures earlier this fall to address an anticipated $805,000 budget shortfall.

To make up the deficit, council pulled $400,000 from its reserve accounts and implemented a variety of austerity measures. Examples are reducing overtime, postponing capital projects and leaving vacant positions temporarily vacant if not deemed absolutely essential.

The city, however, is still not done with the final accounting of costs related to the June 24 fire at the Canada Games Centre.

In addition to the anticipated $805,000 shortfall, the city was expecting another $300,000 in unexpected expenses not covered by fire insurance.

The fire damage, including loss of revenue, has been ballparked by the city at approximately $5 million.

The city expects most of the damage will be covered by insurance, Anderson told council, though it has not yet received all the bills from the international firm hired to do the clean-up.

Cameron asked if there was anything the city should be worried about related to the insurance claim.

Anderson said the city has been working closely with the insurance company, but when dealing with insurance claims, "You are somewhat on unknown ground.”