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The Dunedin City Council is voting this week over whether to take control of the city's public transport next July.
Dunedin Mayor Dave Cull said the vote, taking place as part of this week's annual plan deliberations, was a ''positive'' development, but admitted it could lead to a rate increase.
This was because council staff were restarting a $300,000 budget for work associated with the transfer of powers, including financial analysis and consultation, from the Otago Regional Council, something not anticipated when the draft budget was set.
This ''increased the possibility'' it would not meet its target of having no more than a 3% rate rise, Mr Cull said.
The vote comes after ORC last month offered to transfer management of the city's buses and is the culmination of years of discussion over which authority is best suited to running the $12.4 million a year network.
The staff report also recommends establishing a joint DCC/ORC working party to oversee planning work now being undertaken by the ORC.
If approved, the proposal would be consulted on later this year, with a view to a final decision being made by the city council in November.
Mr Cull stressed that should councillors vote ''in principle'' to accept the offer, it would signal only the start of a process.
''It's not written in stone, at this point,'' Mr Cull said.
However, he believed it was a ''very positive step'', saying the city council was in a better position to run the city's bus services.
''Management of public transport aligns very closely with our other transport and land use planning responsibilities, and a co-ordinated approach would help the city develop a truly integrated transport system for the future.''
''I've been saying that for probably six or seven years and I'm not the only one.''
Should councillors vote to start the process, they would need to look at ways of meeting the $300,000 budget, which Mr Cull said could include a rate increase.
A staff report on changes to the council's draft budget does not reveal funding solutions, with financial planner Carolyn Howard saying funding sources ''are still being explored''.
''The answer is I don't know [where the money will come from] at the moment,'' Mr Cull said.
In the letter informing the DCC of the offer, ORC chief executive Peter Bodeker said the ''appropriate'' date for transferring bus services would be July 1, 2015, which is the day after tenders for the city's bus contracts are due.
ORC chairman Stephen Woodhead said its offer was not open-ended and the issue would need to be re-examined at a later date if the council voted against it.
''If they say no to this offer, then I suppose it's the end of this offer.''
DCC transportation planning manager Sarah Connolly said a study it commissioned last year found ways of improving the city's public transport network at no extra cost - which included increasing the frequency of buses on well-used routes and having fewer services on ''regional'' routes, such as Mosgiel and Portobello.
The consultants also concluded the DCC was best placed to run public transport in Dunedin.