Reduced spending on transport is driving down the council’s expected operating spending next year.
A forecast $143.9 million has now dropped to $138.3m, and the rates revenue required for a balanced budget had decreased by $3.77m, councillors were advised last week.
Accordingly, the rates increase approved in the second year of the council’s 2024-34 long-term plan of 13.8% was no longer required; instead, staff said an 8% increase would suffice.
Council chief executive Richard Saunders said, in terms of the overall rates, the council had "obviously been assisted" by recent decisions to drop transport initiatives no longer expected to attract government funding.
But there had also been a "concerted effort" to manage operating spending and staff levels at the council to "ensure that we are only rating for what we need".
Service levels were expected to be maintained as proposed, but staff had identified some spending deemed unnecessary given the council’s broader work programme, he said.
"We’ve heard a lot of feedback through the long-term plan from members of the community around cost of living and the impacts that rates rises were having on people," Mr Saunders said at an annual plan workshop last week.
"We also heard from a number of councillors in signing off the long-term plan that they were looking for staff to go away and have a really good look at year two and then subsequently year three budgets when we enter the annual plan process.
"So that’s what we have tried to do. We have gone through and ensured that we are being as efficient as we can with the funding that we are seeking to deliver the work programme."
Yesterday, council chairwoman Cr Gretchen Robertson said these were "draft numbers" and the public would have a chance to provide feedback on the draft annual plan early next year.
The potential relief in rates rises was in part due to the NZ Transport Agency Waka Kotahi decision not to co-fund some planned improvements to public transport in Dunedin, Queenstown in part, and new trial areas, "which has limited what we can deliver".
"We’re mindful of financial strain on households and businesses and other savings have therefore come from reviewing our work programmes to improve efficiency and timing."
Cr Kevin Malcolm said he had already informed staff and fellow councillors he was seeking a figure below an 8% rates rise.
"We are spending someone else’s money, so every dollar spent needs to pass the test of value for money, affordability and as an organisation is it our responsibility to undertake that task."
Cr Alan Somerville said it was important councils spent money wisely and carefully, but it was not useful to set a figure for rates in isolation, "because that ignores the essential side of the equation — what the rates will pay for".
"The starting point should be to decide what work needs to be done.
"A lot of the ORC’s work is long-term — to keep our communities safe in the face of natural hazards, to protect our environment for future generations.
"Failure to spend money on these now will be disastrous for the future."
In the 2021-31 long-term plan period rates increases at the council were 48.5%, 18% year and 12%.
In the 2024-34 plan the council decided on total average rates increases of 16.3% this year, 13.8% next year and 8.7% in 2026-27.
