Council boss explains $7m overspend

Tauranga CityCouncil CEO Garry Poole. Photo/file

The Tauranga City Council CEO has come out saying claims the Council's $7 million "budget blowout" needed to be put in perspective.

In a written statement Garry Poole said the $7 million needed to be seen in the context of the total $117 million capital programme budget for the year, which was expected to be within budget.

"Most of the budget variance was a timing adjustment for expenditure that was already planned. One item brings forward the Elizabeth Street parking building upgrade.

"Another brings spending forward one year for the Oropi treatment plant so that we can continue to provide the city with a high quality water supply," Mr Poole said.

The statement said the Monthly Financial Report that was presented to the Finance and Risk Committee this week outlined a number of capital project overspends to the budget.

All of these were either approved by council or approved by the Chief Executive under delegation.

There were three types of budget variance: planned expenditure that has been brought forward; expenditure as a response to the pressures of city growth; and expenditure as a response to health and safety issues.

"All of these are reasonable and responsible fiscal decisions for a council that is managing a growing city," Mr Poole said.

"No budget is ever static. We are adjusting to conditions and staying within the overall budget."

He pointed out that the council's debt for the year will be lower than budgeted.

Breakdown of reasons for the budget variances

Budget timing adjustment - planned expenditure that has been brought forward
The largest overspends were already budgeted for in the Long Term Plan. They have been brought forward from future years as a result of changing circumstances.
• Planned timing for a new parking building was affected by the Civic Heart project, so the new level for the Elizabeth Street parking building was brought forward to provide more parking capacity in the short term. This accounts for 58% of the overspend.
• Oropi Water Treatment Plant: renewal of the filtration membranes has been brought forward from 2016/17 year. The membranes are budgeted to be replaced throughout the Long Term Plan as the need arises.

Expenditure as a response to the pressures of growth
• Growth in the building sector has required additional building staff and their associated resources.
• There have been several growth-related stormwater projects, equivalent to 19% of the $7M.

Response to Health and Safety building issues
• Seismic strengthening work was required for the High Performance Sport Centre.
• Additional expenditure required to demolish an asbestos-affected building.