Mt Eden business owners are outraged by Auckland Transport's latest parking proposal. Video / NZ Herald
Auckland Mayor Phil Goff has confirmed it's not just Auckland Transport running out of money - the council is also running out of money to fund services.
AT has said it is running out of money to operate the city's buses, trains and services and looking to delay the introduction of new public transport services and timetables.
In a press release this morning, Goff said he has no choice with his latest budget but to cut services and push back projects due to rising construction costs, supply chain constraints and falling revenue.
A previous budget update in December mentioned little-used bus services in Papakura, Pukekohe, East Tamaki, Warkworth, Hobsonville, Otahuhu, Papatoetoe and Otara as one possibility.
Other options mentioned in December were to cut funding to popular community events like Music in Parks, Ambury Farm Day, Sculpture in the Gardens and Auckland Heritage Festival.
One suggestion is to cut funding to Sculpture in the Gardens at the Botanic Gardens in Manurewa. Photo / Michael Craig
Cutting grants for the arts sector, environment and natural heritage, library programmes, the waterway protection fund and regional sport were also floated last December by council officers.
Councillors were briefed at a confidential workshop today by officers on the deteriorating state of the council's finances.
Speaking to the Herald during a break at the workshop, Goff said service cuts are being considered by officers at a high level and everything is on the table.
"We are asking everybody for constraint. That is the process you would expect us to go through in the prudent management of finances when times are tight," he said.
Goff said the council is not on the brink of collapse but facing challenging circumstances and will find a way through.
In their release, Goff and finance committee chairwoman Desley Simpson said the council predicted hard times from falling revenue from the impacts of Covid-19 and rising interest and inflation costs before it went out to public consultation on the draft budget.
Auckland Mayor Phil Goff. Photo / File
Back then, the council's finance team was forecasting inflation of 2 per cent in the 2022-2023 financial year. Inflation is now 5.9 per cent and expected to be higher than 2 per cent over the coming year.
Each extra 0.5 per cent in inflation will add $15 million to the council's running costs and each 0.5 per cent rise in interest costs will add $60m.
"Over the past three months many economic indicators have worsened in terms of cost impacts on the council," said Goff and Simpson.
They said the current state of the books will require "tough decisions", including savings from lower-priority spending and pushing back parts of the capital programme.
The impacts of Covid-19 were initially estimated to be $1 billion, but a better-than-expected recovery after the first wave took the figure back to $750m.
The arts sector could lose funding from service cuts. Photo / File
Now Goff and Simpson are saying the loss of revenue caused by Covid-19 is back up to $900m.
"Lost revenue from our shareholding in Auckland Airport has continued at around $60 million a year and lost public transport fares have also contributed to total revenue losses well in excess of that.
"Non-rates revenue makes up over 60 per cent of council's income and, ironically, that has been hardest hit by the pandemic," said Goff.
He said the council is aware the public faces the burden from the rising cost of living and therefore is not prepared to raise rates above 6.1 per cent, inclusive of his new climate action targeted rate.
Goff has ruled out selling strategic assets, such as the council's stakes in Ports of Auckland and Auckland Airport.
Simpson said the council had worked hard last year to find $126m of savings and budgeted a further $90m this year and beyond. The council now has to save more than $90m, but Simpson did not say how much more.
Goff is also planning to dip into the Government's "better off" fund from the Three Waters reforms to meet a "significant part" of the budget operating shortfall.
In December, the shortfall was $85m. Goff said the latest figure was still being finalised, but it would increase by "tens of millions of dollars".
"The bottom line for the council is that we need to manage our finances prudently and sustainably and we will do so."
He has prioritised up to an extra $40m a year to move towards fully funding depreciation of assets by 2028. Despite the pressure on the council, "we still need to address the increasingly urgent need to respond to climate change", the mayor said.
AT has said it has no money to ramp up spending on cycleway and safety to address climate change.
Auckland Transport has run out of money to run public transport at current levels. Photo / File
There is uncertainty over funding for the $1.4b Eastern Busway, the $4.4b City Rail Link is facing a "significant" price increase and AT has no money to co-ordinate infrastructure with Kāinga Ora housing developments.
"We are in the middle of a perfect storm. We don't have sufficient funds at the moment to keep the public transport operating as it is," AT's investment planning manager told the regional transport committee two weeks ago.
