Councillors will consider revisions to the 2026-27 annual plan at Wednesday’s meeting following community feedback on the draft plan.
A budget update report for the meeting said the primary focus had been on reducing the proposed non-water rate increase, now at 4.1%, down from the 6.9% increase indicated in March’s draft budget.
The proposed Three Waters rate increase remained at 16.7% — the amount required ‘‘to ensure financially sustainable water service provision by June 2028’’.
The overall proposed rates increase was revised from 10.5% to 8.8%.
This was a further reduction from the 10.9% increase signalled for the second year of the 2025-34 long-term plan.
The report said while staff had worked hard to reduce budgeted expenditure where possible, ‘‘a number of costs remain largely uncontrollable, including inflationary pressures, contractual obligations and external price increases’’.
It noted a challenging operating environment, including significant local government reform and cost pressures for households and businesses.
Any new or significant decisions had been deferred to the upcoming long-term plan process.
An update to the council’s draft operating budget, which provides for the day-to-day running of council activities and services, was also included in the report.
A $3.35 million increase in non-water external revenue was largely due to a $3m dividend increase from Dunedin City Holdings Ltd (DCHL), bringing the council’s total dividend budget to $12m.
‘‘Councillors have been clear in their expectation of higher, sustainable dividends, and this has been reflected in feedback provided to DCHL during consideration of the draft 2026-27 statements of intent,’’ the report said.
‘‘The increased dividend is expected to be sustained over future years.’’
Non-water interest costs decreased $1.75m, reflecting updated assumptions such as lower opening debt balance than previously forecast and a reduced non-waters 2026-27 capital programme.
Those assumptions were partially offset by an increase in the forecast interest rate from 4.09% to 4.25%.
Three Waters revenue was $129m, unchanged from the draft budget, while Three Waters interest costs increased $325,000, reflecting, in part, the increased interest rate assumption.
At Wednesday’s meeting, councillors will also consider a revised capital expenditure programme, proposed fees and charges and specific funding and amenity requests for the 2026-27 annual plan.
Fuel cost escalation and contractual response options and an alternative option for kerbside mixed recycling processing are to be discussed behind closed doors.
