Inflation, Covid-19, city growth and a potential rates rise of 6.5% in election year will swirl in the minds of Dunedin’s elected officials in the coming days.
A 6.5% rates increase has been presented in draft budgets as the starting point for discussions next week.
That is down from the 7% forecast for the second year of the 10-year plan that the Dunedin City Council adopted last year and it remains to be seen whether councillors will pursue further trimming.
Boosting council staff, making the former Sims Engineering site at Port Chalmers safe and enabling Otago Museum to become a living-wage employer are noteworthy inclusions.
Work to reduce reliance on consultants has also started.
Council staff signalled a dividend could be expected from the Dunedin City Holdings Ltd collection of companies.
DCHL directors had anticipated as recently as June last year, after a lengthy dividends drought, none would be likely before 2024-25.
At this stage, a conservative $5.5 million dividend has been allowed for in 2022-23 and councillors will receive an update about the companies in May, before they lock in the annual plan and strike the rates.
Inflation and uncertainty associated with Covid-19 loom large over the budgeting process.
Savings had been found across the board, but this had largely been offset by inflationary pressures connected to procuring goods and services and running the organisation, the council’s executive leadership team said in its report to elected members.
Inflation has increased to its highest level since about 2010.
Rates revenue is forecast to increase by $11.6million, if the council opts for everything in the draft budgets.
However, there is uncertainty about what difference Covid-19 might make to the almost $7.3million budgeted increase in external revenue, including company dividends.
Council personnel costs have been budgeted to rise by $3.6million, or 5.2%.
The increase in staff numbers, about 36 full-time-equivalent positions, was to respond to growth and building activity in the city and deliver on new programmes, the leadership team said.
More staff were needed in building services and resource consents, improving project delivery, implementing the upgraded kerbside recycling service, reinstating Mosgiel pool staff and across galleries, libraries and museums, and delivering on zero-carbon policy and Maori partnerships.
Recruitment challenges are expected to persist.
Operations and maintenance costs have increased by just over $5million and depreciation was up by just over $9million, reflecting asset revaluations and a beefed-up capital spending programme.
Otago Museum pitched to the council last year for a top-up that would allow it to pay staff the living wage.
The council did not, at that time, find the resources.
The Sims site at Port Chalmers requires a clean-up.
It was a key part of the shipbuilding history of New Zealand in the 19th and 20th centuries and a trust has been promoting restoration and development plans.
To make the old foundry site safe, it would need to be decontaminated and would require stabilisation of the bank.
High-level estimates indicate the work could cost $715,000.