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Staff are already under pressure to find $4.6 million in savings by early next year to achieve a targeted rates rise of no more than 4% for the 2013-14 financial year.
That was part of a council push announced last year to limit rates rises to no more than 5% in 2012-13 - a goal already achieved - followed by 4% and 3% in the following two financial years.
Staff have instead been asked to identify ways of trimming more from capital and operational costs, to free up 1% of the expected 4% rates rise for other uses.
That meant additional savings of $1.2 million would need to be found from a variety of potential sources.
Mayor Dave Cull said the most likely use of the money saved would be to accelerate the repayment of council debt.
Alternatively, the savings could be used to lower the rates rise for the year to 3%, or use the spare money for a new project, although that was considered unlikely, he said.
The savings goal was "challenging", but staff had responded well to similar challenges to date, he said.
Council chief executive Paul Orders said when contacted debt repayment was "clearly a key issue for councillors", and cost-cutting options were being considered.
"It means the days of growth budgets are over as far as the Dunedin City Council is concerned," he said.
The guidelines were drawn up following a workshop with Mr Cull, his councillors and senior staff on August 9.
They were released to the ODT , following a request under the Local Government Official Information and Meetings Act 1987.
Mr Cull said options identified by staff to achieve the additional savings would be considered when budget meetings began in January.
Mr Cull confirmed that could include cuts to service levels - as the guidelines noted - but councillors would have the final say about whether the price of cuts was too high.
The "general rule" given to staff on capital spending was that no new projects could be added to the 10-year capital spending programme agreed at this year's long-term plan hearings, the guidelines said.
Those wanting to add a project considered "unavoidable" would have to find something else to remove from the programme, or demonstrate the savings that would result from adding the project by itself.
Inflation would also have to be absorbed into budgets "to the greatest extent possible", the document said.
The council's water and waste services and transportation staff were also asked to provide more information about spending plans, including whether projects could be delayed or removed, and the risks of doing so.
On the operational side, advice to managers was to "scrutinise" all activities, revenue sources and expenditure, as the review "needs to be more than just a conventional budget process".
"Activity managers should consider all options including how we deliver services, restructuring service delivery to reduce costs, finding efficiencies and opportunities for innovation and maximising revenue opportunities."
Budgets catering for expected staff salary increases would need to be offset elsewhere, as would those making allowances for inflation in some areas, the guidelines said.
While the aim was to keep service levels within those in the council's long-term plan, "your ultimate aim is to reduce rates", the guidelines said.