Teh Dunedin City Council says continued spending restraint, coupled with the sale of surplus land, has helped it cut rates while getting $22million ahead of schedule in debt repayments.
The council's pre-draft annual plan for 2016-17 includes a proposed 1.5% rates increase, well below the council's 3% rates cap.
The rise would increase to 2.84% if extra spending proposals were accepted.
But Dunedin Mayor Dave Cull said the council was not prepared to go further in its ‘‘austerity drive'' by striving for a zero percent rates rise.
To do so would risk deferring necessary spending and ‘‘building pressure'' for larger rates rises in future years, he argued.
‘‘The context is not just reducing cost, because you can do that by just slashing things. It's enhancing value ... and that's what I think we're achieving.
‘‘We've never aimed to have rates rises at zero, so I think it's a moderate, but still reasonably austere, approach.''
Council chief executive Dr Sue Bidrose said the 1.5% increase was the result of another round of line-by-line budget reviews by staff seeking to do ‘‘more with less''.
That had delivered a reduced rate increase for the fifth year running, and together meant the council had stripped more than $20million a year from its budget during the period, she said.
Without that continued cost-cutting since 2011, rates would be 20% higher now, she said.
‘‘This has become an annual process of stripping money out of the budget, finding savings, finding efficiencies, [and] doing things in different ways.
‘‘It's been a pretty effective process, by and large without drops in levels of service, although we're pinching here and there at the edges - there's no doubt about that.''
The spending restraint has helped the council accelerate debt repayments, as had the sale of surplus land.
Information in the pre-draft annual showed the council expected to earn $7.6million in 2015-16, and a further $1.2million in 2016-17, from such property sales.
The money was being used to pay down debt, meaning its forecast core debt - excluding that held by council-owned companies - was expected to drop to $226million in 2016-17.
That was a $22million improvement on the $248million core debt figure forecast for 2016-17 just last year, during last year's long-term plan.
The reduction, coupled with a revised interest rate, meant the council would save $2.8million a year in interest costs.
It also meant the council's goal, of reducing core council debt below $230million by 2021, was now expected to be realised in 2016-17 - four years earlier than hoped.
At the same time, earlier forecasts for group debt - covering the council, its companies and including stadium debt - for the end of 2016-17 had now been revised down, from $605million to $583million.
Mr Cull said the efficiencies, savings and debt reduction had come largely without the need to cut services, meaning the council now had a certain limited amount of room in its budget to invest in the city's future.
‘‘There's no point in just constantly focusing on cost reduction if you don't also try and maintain the value you're providing for the community.
‘‘Sometimes that will involve investment, so the process we go into [next week] looks at what we might invest to get more value for the community.''
The council aimed to keep rates rises to no more than 3% a year, keeping them in line with local government inflation, although anything extra would cost more, he said.
‘‘Assuming you're as efficient as you can be, if you want anything over and above the current level of services, then your rates are going to have to rise above that.''
The council also faced tough budget challenges in the years ahead, with rates rises projected to be 3.8% and 4.8% for the following two years, meaning millions of dollars more would still need to be cut.
