Mayor Jim Watson is promising improvements to OC Transpo, roads and cycle paths in the 2012 budget, with a tax increase of 2.39 per cent.

“Budget 2012 restricts the annual increase to 2.39 per cent for the coming year ‘ the lowest rate in five years,” Watson said yesterday in a speech at city hall.

The draft budget can be changed through a consultation process before it is approved in the new year, but Watson asked councillors and city staff to respect the budget framework introduced yesterday.

The tax hike notwithstanding, Watson touted the city’s ability to save money.

“Management and council led by example last year, cutting office budgets, freezing compensation for elected officials and reducing discretionary spending across the board,” he said. “I am proposing that these measures stay in place this year.”

Watson said the number of city staff shrank last year, for the first time since 2004, by the equivalent of 74 full-time positions, worth $3.4 million.

No one will be laid off as a result, but some people will be moved and retrained, city manager Kent Kirkpatrick said.

After the speech, many councillors said they believe their constituents would be happy with the 2.39 per cent increase because it’s less than the 2.5 per cent year-over-year hike that Watson has been promising to meet or beat since his election campaign last year.

“We promised we’d stay under 2.5 per cent and we’ve come in at 2.39 per cent, which is really good news,” said Coun. Tim Tierney of Beacon Hill–Cyrville.

“It’s a good-news budget and I’m very happy with it.”