Rotorua Lakes Council: Higher than expected rates revenue bolsters deficit improvement efforts

Rotorua's council is working through financial challenges. Photo / NZME

Higher growth, more water usage and lower remissions requests than expected have given Rotorua Lakes Council $1.8 million more in rates revenue than budgeted.

It has helped the council reduce its forecast operating deficit and offset unexpected costs, including from Cyclone Gabrielle damage.

Rotorua Lakes councillors asked staff to look at its operating deficit forecast earlier this year and on Wednesday were given an update by organisational enablement deputy chief executive Thomas Collé.

He told the meeting the overall operating deficit for the last nine months was at $740,000, down from a forecast $5.6 million in December.

Other factors that contributed to the drop included cost savings initiatives including not filling vacant roles and cancelling planned spending with contractors, according to a report presented to the meeting.

Councillor Robert Lee asked Collé how the rates revenue was $1.8 million higher than budgeted for.

Collé said there were three contributing components, the first being more growth than anticipated.

Higher water usage, predominantly from commercial and rural ratepayers, also generated more revenue.

The third reason was lower than budgeted rates remission requests.

Rotorua Lakes Council organisational enablement deputy chief executive Thomas Collé. Photo / Andrew Warner

The higher rates revenue helped offset other impacts such as lower-than-expected developer contributions of about $950,000, which were attributed to lower activity.

Mayor Tania Tapsell said this was significant and asked why. Collé said a lot of developers got consent applications lodged ahead of the council’s new development policy, which came into effect in December.

Developers were building what was already consented and there was also a slowdown in activity due to economic conditions.

“When the budget was set we did not expect the inflationary cycle, central banks raising interest rates and trying to get a significant slowdown of the economy.”

Collé said at the meeting the council’s financial challenges included working with a budget that had “little to no inflation”, as well as unexpected costs from Cyclone Gabrielle and other weather events, and policy changes.

Chief executive Geoff Williams said staff had worked hard over the last few months to deliver the results.

“It certainly hasn’t just happened. It’s happened by an extremely active management approach to expenditure in the organisation.”

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