Next month, and in April, councillors are set to revisit the entire capital expenditure programme and then set priorities.
Council chief executive Sandy Graham outlined a stark situation during a meeting last week — councillors’ decision-making could be constrained if debt servicing was the lion’s share of any rates increase that was allowed, she said.
Budgets in March would "look to reprioritise a whole series of projects, potentially, with the spectre of rates capping in mind", she said.
The government plans to bring in a system that would force councils to consider the impact of a cap on rates increases from next year.
This would affect the city council’s 2027-37 long-term plan.
In theory, the council need not think about that until next year, but it is already considering the environment it might be working in.
The council last year approved a capital programme worth $2 billion over nine years in its 2025-2034 long-term plan.
A capital spend of $231 million was budgeted for 2025-2026 and the council is not on track to deliver all of it. The latest forecast was for delivery of $207m.
That prompted Cr Russell Lund to say there was a systemic problem of "chronic and continuing" capital underspend.
Ms Graham said reasons included project timing delays and caution.
"We are actively managing spend to try and minimise debt and interest costs while still trying to deliver."
Cr Lund said the council would not set out to delay projects because of the prospect of a rates cap.
Ms Graham said the council was mindful of its spending and possible changes to the funding environment.
"Once we set things in train ... it’s far harder to stop them if we’ve got contracts that are in delivery."
"It was at such a level and scale that we flagged early on that it would take us some time to ramp up."
Cr Lee Vandervis described the previous council as being "quite adventurous" in its spending.
"I’m actually really very grateful and relieved that our capital spend is significantly down," he said.
"The fact that we are going to maintain a lower capital spend bodes really well for us actually being able to manage to get somewhere near the 2% rates cap that’s coming in future."
Outside of the meeting, Cr Andrew Simms said the council needed to preserve its borrowing headroom for essential projects.
Development of the Smooth Hill landfill would require $92.4m of capital expense and this was a high-risk project that was avoidable, he said.
Cr Christine Garey said all sorts of commentary existed about "nice-to-haves", but the council’s year-to-date capital expenditure showed half was spent on Three Waters and a quarter on roading and footpaths.
She had received comment from people who expected various projects to be under way or finished by now.
When the council made decisions, the community expected them to be carried out, she said.
Cr Garey seemed to suggest a change of government could affect the likelihood of a rates cap surviving.
"Let’s remember there is an election this year, too."
