Average rate increase of 5.8 per cent struck as Tauranga City Council approves $2.1 billion 10-year budget

Tauranga City councillors have signed off its budget for the next decade. Photo / File

Tauranga residents' rates will rise 3.8 per cent on average from July 1, while commercial ratepayers will pay on average 10.1 per cent more.

A citywide average 5.8 per cent rates rise was struck this afternoon as the Tauranga City Council's elected officials formally adopted the audit-approved Long-Term Plan for 2018-28.

The average residential increase was 4.6 per cent when including the council-run kerbside glass collection service, due to start in October. It will cost about $26 per household for one 45-litre bin.

The budget included $2.1 billion of spending over the next decade as the council faced its biggest programme of capital work.

A rates rise of 7.5 per cent was projected for 2019, followed by 11 per cent in 2020 and 11.5 per cent in 2021.

Councillor Max Mason said the higher increases were evidence of a "bow wave" of delayed growth-related costs chasing the city as a result of underinvestment.

He said an extra 2 per cent increase - a dollar a week per ratepayer on average - could have reduced that bow wave.

Councillor Steve Morris said the bow wave could be avoided with more prudent planning.

The council has previously voted to have a major overhaul of its financial strategy to coincide with the change of direction expected with the arrival of new chief executive Marty Grenfell in August.

That would include looking into other funding options, including a targeted rate for online holiday rentals.

Chamber of Commerce chief executive Stan Gregec said the business community welcomed that conversation, as most were disappointed the council had brought in a differential rate and did not think it was sustainable in the long run.

"However, we are pleased the council has backed down from the massive hit that was originally proposed, where some businesses in the CBD were facing increases of 60 per cent or more, just this year. That was just plain ridiculous."

The new differential rating structure formally introduced today will see commercial ratepayers pay a 20 per cent higher rate than residential ratepayers by 2020.

Mayor Greg Brownless said the reduction in the average increase across the board from 9.6 per cent to 5.8 per cent was evidence the council had taken community views on board.

"This long-term plan has shown we are prepped to listen to what the community says."

Councillor Leanne Brown said voting not to fund the museum was against what she personally wanted, but was what she felt the community wanted.

"I believe I made right decision, though it was the hardest I have made since being a councillor."

She reflected on the last six months, described it as an "intense" period for the council that began with the death of councillor Gail McIntosh in January.

In the following months, the council waded through a byelection, fallout from the failed Bella Vista development, and an intensive process of preparing, consulting on and deliberating its draft Long Term Plan.

Average rates increases from July 1

Tauranga: 5.8 per cent
Western Bay of Plenty: 3.6 per cent
Rotorua: 5.7 per cent
Hamilton: 9.7 per cent
Auckland: 2.5 per cent (plus 11c regional fuel tax).