The bad news is the mayor is warning they might go up as early as next June when council tweaks the city's mill rate.

In a 90-minute special meeting, councillors locked horns on the merits of a tax increase along familiar dividing lines.

Councillors Wendy Bisaro, Blake Lyons, Ben McDonald and Kevin O'Reilly supported hiking taxes 1.5 per cent -- or $30 per average household -- to cover a $238,000 deficit in the city's 2003 budget.

For now, the city will dip into a surplus from this year's budget to cover the deficit.

The 2003 budget includes a $161,000 allocation for four additional firefighters, to be hired April 1, plus $32,000 to hire a new litter clean-up worker and $50,000 to hire a consultant to draft a new general plan for the city.

The budget also includes $750,000 for a new fire truck. However, that money will not be allocated until council has had a chance to review the city's fire equipment acquisition policy.

"I feel an obligation to cover the present costs (of increasing services) myself and take the political heat for it," said McDonald at the council meeting. "I hope I'm not going to hear from people who want to have their cake and eat it, too, in this discussion."

But councillors Robert Hawkins, Dave McCann, Dave Ramsay and Alan Woytuik firmly opposed any increase in taxes.

"The city just sold $6 million worth of property in the last year and we're sitting here talking about a tax increase. To me that's ridiculous," said Ramsay.

Mayor Gord Van Tighem was forced to break the tie after the eight regular councillors came to a draw.

Down the middle

Van Tighem opted for a more middle-of-the-road approach, pushing the city to dip into a $400,000 revenue surplus from the 2002 budget to make ends meet in 2003.

The surplus was slated to go into a cash buffer the city is building up. By 2005, it hopes to have reserves amounting to 10 per cent of its annual budget. However, according to forecasts, the city will be forced into a 4.5 per cent tax hike in 2005 to meet that goal.

Van Tighem's idea came in part because he thinks fiscal forecasts by city staff are too conservative, and a bullish economy will bring unplanned revenue into city coffers.

"It's not a gamble," he said. "What I'm saying, though, is that while this year we don't need a tax increase, it will come. You only have to look at any other major city in the South.

"Our tax rate is now lower than Edmonton or Calgary, but we have other things that impact our economy. If we can do one thing, such as holding the line on taxes for yet another year to keep the cost of living more attractive to people who have the opportunity to move here, let's take it."

But, said the mayor, "If some of the short-term projections don't occur, we may still have to (raise taxes) when we set the mill rate in June."

Not surprisingly, councillors met the compromise solution with both smiles and grumbles.

"I'm pleased that there's an optimism about our future, but when it comes to the budget you have to take a cold-blooded approach. What if something goes wrong?" said Coun. Blake Lyons.

"There's great things happening in Yellowknife but if I'm wrong (with forecasts) I don't want to saddle taxpayers in the future with the fact my enthusiasm led to a financial crunch for them."

"I'm happy there wasn't a tax increase," said Coun. Alan Woytuik. "But I'm still a little upset that we didn't come up with a balanced budget. That would have been more in keeping with living within our means."