Wellington City Council's deficit is partly being driven by dwindling parking revenue. Photo / Mark Mitchell
Wellington City Council's deficit is partly being driven by dwindling parking revenue. Photo / Mark Mitchell
Wellington City Council’s deficit is forecast to increase over what’s budgeted for as it grapples with dwindling revenue from car parks and the city’s wettest winter on record.
The council’s most recent quarterly report from January to March estimated a total deficit of $92.6 million, up from $79m.
The report characterised 2023 as a “challenging” year to operate in with inflation and resourcing pressures.
However, with the end of the financial year now in sight, council chief financial officer Andrea Reeves expected the deficit variance wouldn’t be as bad as the $13.6m forecast earlier this year.
Mayor Tory Whanau wanted to wait and see the results of the full financial year before making any decisions.
“Every household and business is facing increased costs and the council isn’t immune to that,” she said.
“Council business units have been told to keep to their allotted budgets for the financial year to rein in any spending that isn’t necessary.”
At the time of the quarterly report, parking revenue was down by $5.6m year to date, partly because people were adopting working from home as the new normal.
Peak car park occupancy has not fully bounced back after the Covid-19 pandemic and was about 54 per cent. The target is 70 to 80 per cent.
Reeves said the council had reduced budgeted parking revenue in next year’s annual plan and this would also be baked into long-term planning forecasts.
The council’s broader agenda of reducing reliance on private vehicles and encouraging other modes of transport like walking, cycling, and public transport would also be a factor in reduced parking revenue over time.
There was also less revenue from Waka Kotahi New Zealand Transport Agency subsidies, as well as extra costs associated with clearing the hundreds of slips which fell in particularly wet weather last winter.
There have also been higher than anticipated union agreement settlements, which is driving up wage costs.
Mayor Tory Whanau wants to wait and see the results of the full financial year before making any decisions. Photo / Mark Mitchell
Meanwhile, the quarterly report also revealed half of the council’s 16 significant projects and programmes had an amber health status, because of the lingering effects of Covid-19, supply issues, and the weather.
Amber means there are known problems that require the attention of management but can likely be resolved.
The projects include the Frank Kitts Park playground redevelopment, Ngaio Gorge slope stabilisation, fixing the city’s falling street lamps, and the Te Ngākau Civic Precinct programme.
Ngaio Gorge has been hampered by Covid-19 disruption, unforeseen ground conditions, and bad weather.
Slope stabilisation work has been painstaking after large boulders and rubble came down on Ngaio Gorge Rd in 2017 in a large landslide.
Councillors will consider this week whether to allocate a further $3.1m to the project, bringing the total cost to $13.4 million.
The Frank Kitts Park development has been delayed since the construction company working on it went into liquidation last year.
As for plugging the larger-than-expected deficit, Reeves said the cash component will be mainly debt funded.
She also noted a portion of the overall deficit was unfunded depreciation.
An example of this is water pipes.
A revaluation of Wellington City’s water infrastructure assets ordered in the wake of Covid-19, inflation, and volatile construction costs resulted in a significant increase in the estimated replacement cost of those pipes.
The council decided to defer some depreciation in the short term to avoid a significant rates hike.
“What we can do is we can do it over a longer time horizon, because water assets can last a lot longer than we anticipated... so we’re smoothing the impact of that hit,” Reeves told the Herald earlier this year.
