At least this time Montreal mayor Gérald Tremblay was wise enough to telegraph his taxation intentions.

Not that it made much of a difference in the reaction to his mid-January announcement that Montreal was boosting property taxes, by an average of 5.3% for residential properties in the city and 6% for non-residential properties.

The move, announced in the city’s budget, caused an uproar among taxpayers, especially businesses, suburbanites (who, in some cases, are seeing even heftier hikes), and downtown merchants stung by a new tax on parking lots in the city’s core.

The last time Tremblay tried to raise taxes was 2006, soon after being re-elected on a “no tax hike” platform. He was mercilessly pilloried until he backtracked and rewrote the city’s budget. So, during the 2009 autumn election campaign, Tremblay didn’t hide his intentions, making it clear tax increases were in the offing after a four-year freeze.

Despite that, and his administration’s scandal-plagued record, Tremblay won re-election, mostly because voters were even more wary of his opponents. Two months later came the city’s budget: spending rose by $228 million, or 5.6%, to $4.3 billion.

An extended real estate boom has helped keep city coffers full, allowing Tremblay to boast eight years of budget surpluses. All that came to an end with the recession, when the boom in property prices tapered off.

Now, Tremblay says, tax hikes must fill the gap. The stagnant economy is draining city revenue and forcing the city to put more money into employee pension funds to make up for stock-market losses.

But critics say the tax hikes could stifle the city’s economy, just when it needs a boost.

Michel Leblanc, CEO of the Board of Trade of Metropolitan Montreal, says Montreal’s expenses are rising at a “worrisome rate.” The city, Leblanc says, should be emulating businesses by doing a better job of controlling operating expenses.

“The city is weakening businesses at a time when many are struggling to survive,” he says, citing Statistics Canada figures showing that the Island of Montreal lost 35,300 jobs in 2009, while 33,400 jobs were created elsewhere in the region.

Now, the city’s core is being hit with a new tax on parking lots, a measure that is to generate $20 million for public transit but could also drive even more shoppers to suburban malls, whose parking lots won’t be taxed.

The budget also exacerbated tensions between the city and 15 independent suburbs that split from Montreal in hard-fought de-merger referendums in 2004 but are still beholden to the city for shared services such as policing and public transit. They say Tremblay is unfairly dumping extra expenses on them, as they have little say in how the city budget is spent. And this despite the fact that combining municipal services was supposed to cut costs and lower taxes.

The animosity won’t help Montreal present the united front that will be required to push the provincial government to give it the extra taxation powers it needs to bring in much-needed income — through a gasoline tax or highway tolls, for example.

Taxpayers are also wondering how much waste, corruption and incompetence has to do with the city’s ballooning budget. Last year, Tremblay cancelled a $356-million water-meter contract after the release of a damning report by the city’s auditor, who found overspending and administrative laxity. Turns out Toronto was getting similar meters for a third of the price. Meanwhile, there are reports that Montreal-area road construction costs 30% more than elsewhere, thanks to collusion and corruption. IE