Just about everyone on the island of Montreal will end up paying higher taxes in 2010.

The City of Montreal has presented a $4.3 billion budget for 2010-2011 that includes tax hikes for residential and non-residential owners. Taxpayers will pay an average of $154 more per year, per household.

Taxes will rise 5.6 per cent, representing the first general tax increase in nine years.

Taxes will increase an average of 5.3 per cent for residential homeowners and six per cent for non-residential owners.

Mayor Gerald Tremblay says he had no choice, saying the economic crisis had an adverse impact on the city's investment income.

The city also says it had to pay out $90 million to the employees' pension fund to offset the poor performance on the financial markets.

Suburban taxes jump

Hardest hit are the suburbs. Montreal will bill demerged cities 12.5 per cent more for agglomeration services, including transit, police and fire.

On average, agglomeration services account for half the tax bill in demerged cities, so taxes will rise between 5 and 8 per cent, at a time when the inflation rate is less than 1 per cent.

"It's the bad management of the city of Montreal, and I'm not just talking about the questionable contracts, I'm talking the over-bureaucratized system here," said Westmount mayor Peter Trent, speaking for the Association of Suburban Municipalities

Meantime, Cote St. Luc is cutting services to ensure taxes don't increase by more than 5 per cent.

"We cut back on some hires, and we cut back on some supplies," said Mayor Anthony Housefather.

But the suburbs say they are being stretched too thin, and want Montreal to be more efficient.

"Citizens and businesses are leaving the island," said Baie d'Urfe Mayor Maria Tutino. "We are overtaxed and that has to change, otherwise we're going to be left with fewer citizens across the island."

New tax bills will be mailed out Jan. 30.

Parking tax

Wednesday's city budget also includes a new tax on downtown parking lots to finance public transit. The tax rate for interior lots downtown will increase by about $10 per square metre.

Exterior lots will be taxed an additional $20 per square metre. For the average motorist, that works out to an additional $1 to $2 per day.

The hike will add $20 million to city coffers per year.

Spending

The money from the parking tax will fund public transit. The city will spend $450 million on transit in 2010-2011, up 16.7 per cent from the previous budget.

Infrastructure spending is down by a third because of a freeze pending a review of public contracts.

Tremblay's administration has been rocked by scandals involving a number of files, most notably a $355 million contract to replace water meters.

The mayor is cancelling the contract after an auditor's report highlighted cost overruns and poor oversight.