Cuts trim rates rise to 4.7%

Dunedin ratepayers burdened by a decade of hefty rate increases could finally be in for some relief, with the city council's budget heralding a softening of the annual increases in homeowners' pockets.

Councillors will enter the annual budget round on Monday with good news, after last year calling for a reduction in rate rises.

They called for increases of no more than 5% in the 2012-13 financial year, 4% the following year, and 3% the next.

Council chief executive Paul Orders and his staff have bettered that in their pre-draft annual plan, cutting next year's rise from 11.9% to a proposed 4.7%, then uninflated figures of 3.3% the next year, and 1.5% in 2014-15.

That situation does not, of course, come without some pain.

While much of the detail will come when the latest reports are released today, major areas facing cuts or deferrals include transport, where changes include a three-year delay to Portobello Rd and Harington Pt Rd improvements, saving $4.6 million, a seal extension budget cut for the next 10 years, saving $4.7 million, and the removal of the Rattray St crossing budget, saving $1.1 million.

The parks and reserves department plans to save $4.2 million over 10 years by removing planned upgrades of city parks from its budget.

The council's budget for libraries has included the deferral of redevelopment of the city library and construction of the South Dunedin library until 2015, and the redevelopment of the Blueskin Bay library would also be deferred until that year.

Peninsula cycleway, road widening and sea wall improvements have been deferred for three years, until 2015-16.

Council finance and corporate support general manager Athol Stephens said yesterday with savings to operational costs taken as far as possible, the council could struggle to find money for unexpected problems like flooding or other weather events.

Those matters are bound to be controversial, but councillors will be cheered by city property's work to come up with a $5 million reduction in the Dunedin Centre redevelopment project, and cuts in operating costs across council departments.

The council has spent much of the past decade, or more, on a sometimes necessary, sometimes aspirational spending programme.

The result is a water system delivering A-grade water, work on the city's sewerage system that has finally cleaned up the city's long-polluted beaches, upgrades to its historic town hall and Dunedin Centre, and, of course, a new covered stadium.

But those outcomes have come at a cost, and Dunedin residents have faced a steadily increasing rates bill, and the council a level of debt that surpassed its own debt limits policy.

Mr Orders and Mr Stephens released the embargoed budget to media late in December.

The 11.9% figure the council had originally faced was "a high level of rate increase", Mr Orders said, and councillors were keen to take the city to a more sustainable situation that addressed affordability concerns.

To reach the targets the council required meant a "substantial" budget reduction of about $8 million.

To cut that, staff were given guidelines to review capital expenditure, and delay that spending by three years if possible.

Discretionary expenditure was given "particular attention", and managers were also given guidelines for their operational budgets, with service levels to be maintained with a zero increase, and inflation of 3.2% absorbed.

"We tried to avoid the slash-and-burn approach," Mr Orders said.

The "key drivers" for the increases were the Tahuna sewerage works, the Otago Settlers Museum and Dunedin Centres upgrades, and the $5 million annual dividend shortfall that became clear during the year, after council-owned Dunedin City Holdings Company revealed it could not afford to pay what it had been asked.

Mr Orders stressed the political process about to take place - the budget meetings, consultation hearings in May, then the final decisions for a June sign-off, would change the figures.

"This is before the political discussion.

'There is a whole range of unfunded items, and clearly there will be political views.

"This is the first cut."

There were, however, "further management actions to see if that can be improved further".

There was a "level of risk" in terms of unforeseen events, something of which the council had to be mindful.

"You will find no major service level cuts, but you have got that tightening up of budgets."

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Key dates

Jan 23: Councillors' workshop for 2012-13 pre-draft plan (non-public).

Jan 24-25 (and Jan 26-27 if needed): Pre-draft plan public meetings.

Feb 27: Council meeting to approve draft plan for consultation.

March 10: Public consultation begins.

April 11: Submissions close at 5pm.

May 2-4: Public hearings on draft plan submissions.

May 9-16: Public council deliberations on draft plan.

June 18: Council meeting to adopt annual/long-term plan and confirm rates.

July 1: 2012-13 annual plan active.

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david.loughrey@odt.co.nz