KEY POINTS:
North Shore Mayor Andrew Williams says his council must look at spreading its spending on capital works over a longer period if it is to avoid a bigger rates rise next year.
His election promise was to bring down rates to a reasonable level, and the council is aiming at an average 5.9 per cent rise for 2008-09.
But an officers' update of the draft budget estimates says the overall rates rise for the year after that (2009-10) may need to be more than 8 per cent to cover capital spending, financing and upkeep of the assets.
"That won't be the case," Mr Williams said yesterday. "We are starting on revising our long-term plan in July and we will be spreading our capital spending over a longer period to keep our rates more reasonable."
He indicated that the council's present 10-year plan period could be bumped out to 15 years.
The update showed that in the previous five years only 83 per cent of budgets for projects was actually spent in that year.
"So if you are unable to deliver everything, why rate for it? We will be looking at the projects' priorities and some will just have to be done over a slightly longer time frame."
Each $10 million borrowed for capital projects equals a 1 per cent rates rise in the following financial year and about $30 million of debt was deferred for items such as the northern recreation facility and settling on land bought for the Northern Busway.
Mr Williams confirmed a further threat to projects: a sharp fall in the income from the growth levies imposed on developers, and other fees, because of the downturn in building in the past six months.
A drop of $1.3 million in fees is expected, which is 10 per cent.
"We will be tailoring our cloth accordingly and the days of big-spending bureaucracy and gold-plated spending of the past are over," said Mr Williams.
"We will be reviewing priorities but the wish list might get trimmed."
The rates rise proposed to the public depends on changing the city's funding policy to reduce how much debt and interest it has to pay in one year.
Annual plan submissions show concern about rises above the Reserve Bank's 0-3 per cent inflation guideline.
Greypower North Shore says the forecast level of rates is unsustainable and welcomes Mr Williams' promise of a thorough review of rates rises and spending in the long-term plan.
John Howe of Beach Haven says: "No more loans please. Our children will have enough problem affording to live on the Shore already."
Glenfield resident Ray Skinner says the policy change would be imprudent. "Apart from the year-on-year increases in interest costs, such a policy fails to take into account increasing need to fund replacement of worn-out capital items and to increase the capacity of existing capital items."
Katy Marriott of Devonport said extending the loan repayment was suitable for councils with low debt but North Shore's draft plan showed a forecast debt of $391 million.
Greenhithe Residents and Ratepayers says it backs extended debt repayment "as a means to limit rate increases in a period of high capital expenditure ... applying the intergenerational equity principle".
