Dunedin's rating dilemmas

It is that time of year again when the Dunedin City Council examines its long-term budgets and endeavours to keep the rates increases to a manageable level.

This is always a difficult process and it is even worse this year.

Already, the council is warning the self-imposed limit of no more than 3% per year looks likely to be broken for the next three years.

The council's pre-draft long-term plan - which is yet to be refined or considered by the public - forecasts a rates rise of 3.7% for 2015-16, followed by 5.5% and then 4.2% in subsequent years.

This is at a time when the inflation rate could well be about 1% and wage increases and benefit hikes about the same level.

This also follows many years of rates rises above the increase in the cost of living.

These rises accumulate and make the rates burden ever more difficult for many ratepayers.

Dunedin is fortunate to have income from the Waipori fund and from its companies, or the situation would be even more dire.

And it is true Dunedin's rates, while constantly rising, are not too much out of kilter with most centres.

But Dunedin is paying for the profligate years, and not just because of stadium costs.

Too often, councillors put projects on the hock.

Too often, and you can hear them saying it, the cost of a project was the cost of the interest with little allowance made for climbing debt or for the yearly operational costs.

Mayor Dave Cull says the city has to keep investing, especially as it is ''on a bit of a roll''.

In that he is largely correct. Slashing and burning will undercut progress the city is making.

But the council will have to look at ''service levels''.

It will have to make some hard and some unpopular choices because rates cannot keep galloping well in front of the rate of inflation.

All the easy and even many not-so-easy savings have been made and it is proposed most fees rise by 3% for the next financial year, again well above inflation.

That only leaves the examination of core costs and core income.

In this environment, it will be extremely difficult to get new projects across the line, even if they are most worthy.

While there are strong arguments for a South Dunedin community centre/library can it go ahead any time soon?

The Mosgiel pool is perhaps even more worthwhile given the sense of Mosgiel/Taieri identity, the overcrowding at Moana Pool and the need for children to learn to swim.

But are such large capital costs and hefty operation costs possible in the current environment?

There might also have to be juggling of cycleway plans to minimise rates rises.

Once again, the pressure will be on staff, councillors and the council senior management.

It should be acknowledged what has already been achieved in the past few years.

Chief executive Sue Bidrose has also noted that through trimming costs and juggling expenditure, a ''huge challenge'' for council staff, a forecast rates increase of 2.2% has been produced.

Then along came the $8.2 million hole in the budgets, with Forsyth Barr Stadium's financial difficulties - or should that be the stadium's earlier unrealistic financial predictions - resulted in another $1.8 million being needed from the council.

The council was also missing $4.5 million from its own companies which have cut dividend payments while focusing on deferred investment in their own businesses. Then there is dropping New Zealand Transport Agency's funding for local roading projects.

The councillors are now beginning to scrutinise the latest long-term plan, which looks towards the next 10 years.

A crucial part of this is the reduction of core debt, and this cannot be shied away from.

It is at times like this, and during the related annual plan considerations, that the councillors and the senior staff are put to the test.

Many might consider them overpaid but few could envy them their tough tasks ahead.

They will need to proceed with courage and with much skill and much wisdom.

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