Wellington City councillors will discuss the rates relief options at a meeting on Thursday. Photo / Mark Mitchell.
Wellington City councillors will discuss the rates relief options at a meeting on Thursday. Photo / Mark Mitchell.
Wellington City Council has released draft details of what will effectively end up being an emergency budget to mitigate the fallout of the Covid-19 pandemic.
The immediate response being proposed includes rates relief and council officers have recommended an increase of 4.8 per cent for the upcoming year.
That compares to a proposed rates hike of 9.2 per prior to the coronavirus outbreak.
The council was already facing significant cost pressures prior to Covid-19 with costs forecast to increase by $55 million in response to earthquake and resilience issues and asset depreciation.
It's now estimated council revenue will be down $28 million for the remainder of the 2019/20 year and a further $30 million in 2020/21. The council will also miss out on extra revenue it was banking on from increases to fees and charges for council services equating to $11 million.
Council officers have put three different rates options on the table for councillors to consider at an extraordinary Wellington City Council meeting on Thursday.
Officers have recommended a rates increase of 4.8 per cent, which would result in debt-funding $68 million.
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Under this plan, current levels of service would be maintained and the debt funding would cover the one-off impact of lost revenue, as well as not increasing fees, and other funding adjustments.
But the rates increase for 2021/22 could still be as high as 10 per cent.
Officers said it was important to strike the right balance between supporting the current needs of those facing financial hardship, without overly burdening future generations with an "inappropriate" level of debt.
"Thereby reducing choices for them in respect of significant investments required in infrastructure and preparing for the impacts of climate change, to ensure that Wellington is a capital fit for the future."
The second option council officers have provided is the same as their preferred one but would also debt fund additional depreciation costs, which have been revealed in a significant revaluation of water and transport infrastructure assets this year.
At the moment the increase in depreciation is pegged at $11 million, bringing the total debt funded operating costs to $79 million, but there's a risk that could increase further once asset valuations are finalised at the end of this month.
This would result in a rates increase of about 2 per cent, but officers have warned the option could burden future ratepayers and they did not recommend reducing depreciation funding at a time when the city expected an increased funding of infrastructure.
The rates increase for 2021/22 under this option could be as high as 16 per cent.
Option three outlined what was needed to achieve a zero rates increase, after councillors lobbied to have that scenario on the table.
A rates freeze would require a further $16 million of cost cutting or debt funding, bringing the total debt funded operating costs to $84 million.
Cost cutting would result in significant changes to service levels in community based services and debt funding would result in a rates increase as high as 17 per cent the following year.
