Tough financial calls with pressure on rates and debt levels

Mayor Dave Cull leads Dunedin city councillors as they begin deliberations on the Dunedin City Council's 2019-20 annual plan in the Municipal Chambers' Edinburgh Room yesterday. Photo: Gerard O'Brien

Councillors began deliberating on the 2019-20 annual plan yesterday, which included $36million in additional or accelerated capital spending in the year ahead, as well as a proposed 5% rates increase.

But the council also still had to decide on whether to include a list of community funding requests, worth another $1.3million, in the 2019-20 budget.

If it approved all of them, rates would have to rise beyond the 5% limit set - as an annual average - by the council's 10-year financial strategy, council chief executive Sue Bidrose told the meeting.

Extra capital spending, as the council attempted to catch up on millions in deferred maintenance, also meant the council's self-imposed debt limit of $350million would come under pressure in the years to come, she warned.

Costs were rising over the 10-year plan, including an extra $20million to complete the Peninsula Connection project to Portobello, as well as other costs like the fit-out of a new South Dunedin library.

Council staff were ''pretty delighted'' to be accelerating spending on three waters renewals by $17million, and ramping up spending for improvements to a ''critical'' core services, but hard decisions awaited.

''The challenge going forward will be the competing pressure to maintain delivery of the capital renewal and development programme, alongside the resultant pressure on the level of debt.

''The continued pressure to make good from the underspends of the past continues to impose austerity on you, and on us,'' she said.

Council transport group manager Richard Saunders said the squeeze was also reflected in the rising cost of the Peninsula Connection road safety improvement project, which had forced the sections beyond Portobello to be deferred for now.

The route from the city to Portobello was now expected to be completed by July 2021, providing a continuous link from there to St Leonards - and eventually to Port Chalmers - but he still saw value in completing the project ''end to end'' in time.

Councillors voted 14-1 to accept the budget changes, including changes to the Portobello Connection, which Cr Christine Garey said would still deliver ''incredible value for money'' and Cr Rachel Elder said would be a ''world-class'' facility.

Cr Lee Vandervis was the only councillor to vote against the changes, arguing a 5% rates rise was out of step with other measures, including inflation.