London council debates cutting taxes or using $16M surplus to pay for social services

London homeowners could get a property tax cut over the next two years as city politicians weigh options on how to best spend a nearly $17 million surplus in the city's operating budget.

On Tuesday, council directed staff to run numbers and assess how much Londoners can save on their property taxes in 2026 and 2027 which may be included in Mayor Josh Morgan's final operating budget that will be tabled later this year

While councillors voted 12-3 in support of this, Coun. Sam Trosow made the case to put the money in a fund to invest in community programs, including services uch as warming centres and public washrooms.

"This budget surplus gives the budget committee and city council an extraordinary and unusual opportunity to make some very needed changes in the programs and services that we're offering in this community," said Trosow.

"I think if we were in a situation where everything is fine, we wouldn't have to do that but we're hearing from so many different people that we have a serious crisis in terms of homeless services."

Trosow's motion wasn't discussed at Tuesday's meeting but he can ask staff to make a business case about what social spending scenarios would look like.

The money is part of a total $58.8 million property tax surplus from the 2024 year-end operating budget. Of that, $16.6 million will go toward paying development charges to the Ontario government, and $25.3 million will contribute to reducing future debts. That leaves the remaining $17 million available to spend.

This year, Londoners saw a 7.3 per cent property tax increase that cost homeowners around $260 more on their 2025 tax bill for residential properties that are assessed at the average value of $252,000, according to the city.

The tax hike was largely due to council approving an unprecedented $672 million budget for London police to hire more staff and civilian officers, body-worn cameras, a training facility and a new light-armoured vehicle during the 2024 to 2027 budget cycle.

Coun. Steve Lehman said constituents have been vocal about the economic hardships they're facing as a result of a high cost of living and U.S. tariffs. He says it's why he's supporting using the surplus to cut taxes.

"We've seen darker economic clouds coming over the horizon. Canada's unemployment rate is rising due to tariffs actions by our southern neighbour and other factors, we've seen it not only nationally but locally," Lehman said.

"Property taxes are a regressive tax whether your income goes up or down, or whether you have a job or not, you're still required to pay it. It's important right now for council to give this message to Londoners that we're aware of the potential challenges financially to households."

Other councillors who opposed the motion were David Ferreira and Anna Hopkins, expressing concerns about whether this will make the 2028 to 2031 budget cycle more costly, and cause problems for a new council who will be elected next year.

Morgan explained the business case only provides information such as the percentage of a potential tax reduction and how it will be allocated. Council will then be able to make its own changes and finalize how the $16.9 million will be used.

"You will have the full variety of business cases, whether they were included [in the tabled budget] or not to then make amendments and you can adjust them in any way you'd like because you have the right to amend the budget under time frames the legislation allows," Morgan told councillors.

"We're still engaged in a robust service review process over the next couple of years, so we can make sure that a little bit of that process goes toward backfilling some of the challenge that we might have in 2028 related to this."

If the business case passes at the budget committee, Morgan will decide whether to include it in his budget, set to be tabled this fall.