Dunedin councillors have endorsed a rates increase of almost 6.6% and declared it a result of fiscal discipline in inflationary times.
However, it has been signalled challenging circumstances will need to be faced next year.
The Dunedin City Council has chosen to accept an unbalanced budget for 2023-24, and the deficit looks set to run to a figure approaching $30 million, amid uncertainty over Three Waters reforms.
Cr Lee Vandervis said yesterday it was a rare pleasure for him to move a motion proposing a rates increase he could live with.
Increases in the past had exceeded inflation and the draft rates rise for 2023-24 was scraping in below the rate of inflation, he said.
The museum had been in line for a 2% increase in its levy, but it wanted 7% and the council opted for 5%.
Councillors chose to apply the extra funding to the rates increase, rather than extending the council’s deficit.
Cr Vandervis said the council was being transparent and the main reason for the proposed rates increase moving from about 6.5% to almost 6.6% was the council having to step in where the Government had not.
The council is poised to post a deficit of about $28.2 million or possibly $29.1 million, depending on what approach councillors take on accelerating Three Waters capital spending.
A discussion about capital expenditure, including Three Waters, was postponed until next week.
More information about capital spending is to be compiled for councillors ahead of next week’s council meeting.
Cr Vandervis voted for the rates increase, but against changes to the 2023-24 budgets for inclusion in the annual plan and also expressed a lack of comfort about the trajectory of debt and interest rates.
Cr Carmen Houlahan said rates in Dunedin had been kept to a reasonable level.
"In comparison to other cities, our rates have remained lower," Cr Houlahan said.
"All of us have tried to be prudent to keep costs down, but we’ve also been ambitious."
Cr Steve Walker said he was confident the community would back the move to boost the museum’s levy.
This amounted to lifting rates by about three-quarters of 0.1%.
Cr Christine Garey said the council had been fiscally responsible, and it invested in the community and its people.
Dunedin Mayor Jules Radich said the rates increase was reasonable and it had moved slightly to accommodate the museum’s needs.
There was uncertainty about Three Waters, but the picture would be clearer next year when it came time to discuss the 2024-34 long-term plan, Mr Radich said.
Cr Jim O’Malley said the council’s decision to proceed with an unbalanced budget was tied to Three Waters.
"Next year, we will have to resolve that," he said.
The rates rise next year could be significant, Cr O’Malley said.
Cr Cherry Lucas thanked her colleagues for being fiscally responsible.
Cr Marie Laufiso noted museum funding was the issue that attracted the most formal submissions.
They were overwhelmingly in support of boosting the levy above a 2% increase.