Spending levels signalled by the Dunedin City Council are set to come under scrutiny from councillors at a meeting next week.
They will go through budgets for the 2026-27 draft annual plan, which included reference to rates possibly needing to increase by 10.5%.
This was down a little from the 10.9% that had been signalled for the second year of the 2025-34 long-term plan.
A city council media release issued yesterday about the draft annual plan had no mention of the 10.5% figure.
Council chief executive Sandy Graham said in her report staff had worked across all departments to identify savings, reprioritise activities, and refine budgets without compromising levels of service.
The proposed Three Waters rates increase was 16.7%, which was higher than the 15% that had been signalled in the long-term plan.
For non-water activities, the budgeted rates increase would be 6.9%. This could be compared with an 8.5% forecast from the nine-year plan, the council said.
Ms Graham said staff had worked hard to find savings in non-water activities.
"However, there are some things we have no control over, such as the increasing maintenance costs, electricity and gas costs, interest rate movements and increasing depreciation cost," she said.
"We are also challenged by the current economy and recent high inflation."
The planned increase in Three Waters rates is partly because the council has to move towards no longer subsidising the activity through other parts of the operation.
Its draft operating budget for Three Waters was $133.9 million — up $6.3m, or 5% on the current financial year.
Outside Three Waters, the largest increase in operating budgets was for roading and footpaths — an increase of $3m, or 4.5%, was proposed there.
Council staff recommended additional payments be put towards Forsyth Barr Stadium debt repayment, starting with $1.25m in 2026-27.
A report on the subject for councillors said the stadium had reached a point in its life cycle where operating and capital expenditure requirements were increasing.
"The current financial model is unsustainable, and additional debt is needed to cover ongoing operating and capital costs."
A report about capital expenditure overall said "experience indicates" a programme of about $200m a year was sustainable.
The draft budget had a capital spend of almost $240m for 2026-27, compared with $230.5m that had been signalled in the long-term plan.
Cuts appeared likely in the coming months — possibly to get the spend close to $200m.
"The draft capital programme has increased in part due to delays in the current year’s programme," Ms Graham said.
"A further update will be provided to the council in May and changes made to ensure the programme is deliverable and affordable."
In her report, Ms Graham said the government’s proposal to bring in a cap on rates increases was a significant shift.
"In response to this, work will be required to rationalise expenditure, improve efficiency and maximise revenue opportunities."
This would be part of the 2027-37 long-term plan process.
Once the 2026-27 draft annual plan is approved for public consultation, feedback will be accepted from March 30 until April 29.
