Council tentatively agreed to the rate increase Monday. If adopted, the hike will mean an additional $6.04 per year for every $100,000 of assessed value. For a home assessed at $250,000, for example, the annual tax rate increase would be an additional $15.10.

Overall, the township’s expenditures increased 12.2 per cent over last year.

Major budget drivers include the addition of four municipal staff, including the township’s new treasurer, a bylaw enforcement officer and two part-time sewage inspection workers for Lake Joseph. A part-time employee for the Duke House visitor centre and part-time summer student for the township’s planning department are also in the budget.

When wage adjustments for current staff are factored in, staffing costs make up an estimated 74 per cent of this year’s levy increase, the budget shows.

Road maintenance costs account the next largest portion of the tax rate increase. Costs for road maintenance rose 35 per cent or approximately $750,000 this year. According to municipal treasurer Julie Stevens, roads maintenance costs were understated by approximately $350,000 in the township’s budget for the past two years. The township will now use $710,000 of its $1.5-million Ontario Municipal Partnership Fund (OMPF) grant to offset road costs this year, Stevens reported.

While the municipality’s tax rate was initially forecasted to increase just 5.5 per cent, councillors added the additional percentage point to reduce further increases for ratepayers over the next two years.

According to Stevens, if a 5.5 per cent rate increase was adopted, the tax rate in Muskoka Lakes would increase by 7 per cent next year, and 8 per cent in 2010 in order to maintain adequate service levels and reserve funds, as well as complete any capital projects now underway.

By adopting a 6.5 per cent tax rate increase this year, councillors can stabilize increases for ratepayers to the same level for the next three years, Stevens indicated.

“If this was for my home or business, that’s what I would choose for myself, without question,” said councillor Stewart Martin about the three-year, 6.5 per cent per year plan. “In three years, we’re out of the woods.”

Councillor Ian Wallace called the option “a balanced approach” to taxation.

“Six point five per cent across the board, I think is the way to go,” Wallace said.

Not everyone, however, is pleased with the proposed increase.

During Monday’s meeting, several residents petitioned council to cut back spending and reduce the levy further.

“Councillors have been elected to be stewards of the taxes paid by ratepayers,” said Walker’s Point resident Sally Hill-Poupee. “Taking last year’s accounts and projecting their continuation, with an inflationary increase, does not answer the question of whether last year’s expense was reasonable in the first place.”

In 2007, the township increased its tax rate by 7 per cent. A large portion of the increase was attributed to debt financing for more than $12 million in capital expenditures for projects like new streetscapes and fire halls in Bala and Port Carling. Almost half of the 2007 capital budget was to be financed by debentures.

The spending irked many ratepayers, who felt it was excessive and would deplete the township’s reserve funds.

Although most of the 2007 capital projects did not proceed, the township still will pay approximately $180,000 in debt service charges this year for debentures that have been or will be issued for last year’s capital plans.

Although she eventually voted in favour of the draft budget, councillor Nancy Thompson said she worries about the debt.

“I’m extremely uncomfortable with getting into a deficit situation,” said Thompson.

Former township councillor Adele Fairfield also expressed concern over council’s “unhealthy spending philosophy.” Fairfield, who also addressed council Monday, noted the township is using grant money to offset its operating expenses.

“You are deficit budgeting,” said Fairfield, pointing to the OMPF grant. “You are counting on things to happen that may not happen.”

Stephens said the OMPF grant is unrestricted and many municipalities use it to fund both operating and capital expenses. Building the grant money into future budget forecasts is not unreasonable, she said.

Further, CAO Walt Schmid pointed out that several of the township’s planned capital expenditures were cut back this year. The cost of the Port Carling fire hall has been reduced by more than $100,000 due to design changes, while costs for the Bala streetscape have also been scaled back. No money will be spent on the construction of the Port Carling streetscape in 2008. The cost of expanding the Torrance cemetery has also been spread over three years, Schmid said.

Money for the Port Carling streetscape will be put toward the cost of renovating the township office and obtaining new self-contained breathing apparatuses for the fire department.

Overall, the township’s capital budget totals $6.8 million this year, approximately half the amount budgeted in 2007.

Council is expected to adopt its 2008 budget May 27.