Grim warning from Christchurch council

A grim warning to be prepared for a bigger rates bill has been issued by Christchurch City Council.

The city council is over budget and predicts it will be $9.4 million in the red by June.

If they can't find another way of reducing costs, earthquake weary ratepayers could be facing a 9.3 per cent rate increase instead of the budgeted 6.5 per cent increase.

Finance committee members will consider the report on Tuesday at their first meeting for the year.

The report says the cash operating deficit remains the "main financial concern this year".

"If the deficit cannot be found from operating savings or increased revenue in the next six months, options to fund it include increasing rates for 2014-15 by 2.8 per cent over next year's current draft planned increase of 6.5 per cent."

The culprits it identifies are the consents debacle and indemnity insurance, earthquake related rates remissions and legal costs and interest costs.

But finance committee chairman Raf Manji has down played the warning.

"It's just really stating the obvious - if we can't find the savings then this could result. Staff are just being prudent and advising of the ramifications of the current predicament," he said.

"I have categorically instructed staff that they are to keep the rates increase within the budgeted figure.

"A small amount of belt tightening will deliver significant savings," he said.

He could not state specifically where savings were.

"They are everywhere," he said.

However the news comes as no surprise to former city councillor and chairwoman of the finance committee Helen Broughton.

She said it is a direct result of the consents debacle.

Crown manager Doug Martin was brought in by the Government in July after International Accreditation New Zealand (Ianz) revoked the council's consenting accreditation.

"That $5 million for the building consent fiasco was a direct cost not planned in the council budget. I would be surprised if it could be found by savings in other areas," she said.

Last July she said the finance committee had looked at the same problem but had decided to see if it would improve with time.

"We discussed this and the wisdom of the committee decided to see how it would pan out. The staff felt that if some areas were under, which some of the earthquake budgets are, it may even out. Personally I would look at how there could be cost savings but the view of the committee was to keep an eye on it," she said.

The report says that earthquake rebuild expenditure, earthquake emergency and response borrowing, capital works programme are all below budget this year.

By Shelley Robinson of the Christchurch Star

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