KEY POINTS:
The Auckland City Council officially begins a new 10-year budget today where core services like parks, libraries, swimming pools and footpaths will be cut, reduced or deferred.
Finance committee chairman Doug Armstrong said yesterday that the council would have to make some unpopular decisions to keep rates to the council rate of inflation.
"It is more important with the way the economy and the world is sort of going belly-up," Mr Armstrong said.
The ruling bloc of Mayor John Banks and Citizens & Ratepayers is facing double-digit rate increases inherited from the previous council and deteriorating economic conditions.
Mr Armstrong said it was not easy cutting this year's forecast rate increase of 10.2 per cent to 5.1 per cent and it would be a lot harder next year.
On top of that, the council has to update the 10-year budget from the big spending, 10-year budget prepared by the previous council.
In a paper prepared for today's extraordinary budget-setting meeting, chief executive David Rankin said holding rates at the council rate of inflation would require a "significant reduction in expenditure".
The biggest casualty will be the capital works programme where any project not already nailed down - like the $113 million Auckland Art Gallery upgrade - will come under intense scrutiny.
Department heads have already been trawling their budgets to find $30 million worth of operational cuts next year alone. This will hit core services such as libraries, parks and swimming pools.
The Herald understands a $33.8 million "world class" package for the 2011 Rugby World Cup could be scaled back. Spending on cleaning, security and transport will go ahead, but $10 million on "discretionary" projects like large-scale celebrations and cultural events are under the microscope.
So, too, is a further budget of $18 million for road improvements around Eden Park.
Mr Armstrong said the council was also looking at ramping up its borrowing programme from $317 million at present to about $1 billion by 2016.
Last night, Mayor Banks said the country was going into very difficult times. The 10-year budget was going to be laced with caution while sustaining a level of sustainable progress.
Mr Banks said he worried about the rising debt and the cost of the leaky building crisis, which the Herald understands accounts for about 3 per cent of rates a year.
The council will not begin considering cuts to specific projects until November 18.
