$123m needed to achieve zero per cent rates rise

Photo: Geoff Sloan
Photo: Geoff Sloan
More than $123 million stands in the way of the Christchurch City Council achieving a zero per cent rates rise this year.

Chief financial officer Carol Bellette said the city council would need to address a revenue shortfall of $99 million to return to the position it was in before Covid-19 and make a further $24.6 million in savings to achieve a zero per cent rates rise.

Addressing this shortfall without increasing rates would require the council to either borrow money, make cuts to its overall budget, or increase charges to services.

Bellette said the council has already borrowed $134.6 million this financial year and expects to be able to borrow at an average cost of 1.2 per cent in the coming financial year.

City councillors will meet next Friday and consider a revised draft Annual Plan, which will look to adjust the council's finances to account for the impact of the Covid-19 pandemic, before it is sent out for public consultation for a second time.

The organisation was left with no choice but to reconsider its draft Annual Plan, which originally went out for public consultation in February before the effects of the pandemic began to weigh down on the council.

The plan will dictate the level at which rates rise, if at all, over the coming financial year. This is likely to attract significant debate at next week's meeting with a number of councillors calling for a zero per cent rates increase and others seeing anything of the sort as unrealistic.

Mike Davidson.
Mike Davidson.
City councillor Mike Davidson said achieving a zero per cent rates increase would require serious cuts throughout the council and across its services under the current Covid-19 climate.

"If you go down to zero [per cent rates increase] you are not cutting down to the bone, you are cutting right through the bone," he said.

"When you go down to zero you are cutting that much off your operating budget and your capital budget that anything really becomes a possibility to be cut and that becomes a political decision based on where the votes lie around the table.

"What would happen to the stadium? What would happen to the hot saltwater pools and pools in other communities?"

Sam MacDonald.
Sam MacDonald.
However, city councillor Sam MacDonald still saw a zero rates increase as possible.

"We have got to look at the bigger picture and I think the mindset of the council for too long has been to spend more to fix things," he said.

City councillor Aaron Keown also felt there is plenty of room to make cuts within the council's budget to achieve a zero per cent rates increase.

"There are a number of items in there [the council's budget] that we should not be involved in, at least not this year," he said.

Aaron Keown.
Aaron Keown.
"The least we can do for businesses and individuals is not increase their outgoings with rates increases."

However, at last week's council meeting chief executive Dawn Baxendale cast doubt over the viability of a zero per cent rates rise.

"The world you were in eight weeks ago is fundamentally different to now, so what may have been seen to be a proposal, and I will say this from a perspective of simple maths, of naught per cent I think will be very unrealistic to achieve," she said.

Lianne Dalziel.
Lianne Dalziel.
Mayor Lianne Dalziel said she remained "laser-focused" on assessing all options, including ones involving a zero per cent rates rise.

"We are looking at our level of debt and the impact of Covid-19 on our income, funding and loss of dividends and within that we are looking at a range of options, including zero increases to our rates. There are a range of levers to be pulled," she said.

Once the draft Annual Plan is signed off by city councillors for public consultation, it will remain open for feedback until June 29. The plan would then be formally adopted by councillors on July 30.

 

suv-updated-banner.jpg

Local trusted journalism matters - now more than ever

As the Covid-19 pandemic brings the world into uncharted waters, Star Media journalists and photographers continue to report local stories that matter everyday - yours.

For more than 152 years our journalists have provided Cantabrians with local news that can be trusted. It’s more important now than ever to keep Cantabrians connected.

As our advertising has fallen during the pandemic, support from you our reader is crucial.

You can help us continue to provide local news you can trust simply by becoming a supporter.

Become a Supporter