Hamilton City Council chief executive Richard Briggs. Photo / File
Hamilton City Council chief executive Richard Briggs. Photo / File
Hamilton City Council is forecasting a $33 million drop in revenue because of Covid-19.
The council chief executive, Richard Briggs, said in a statement the council's initial modelling shows under a best-case scenario, with business back to normal by July, the financial impact will be significant.
Under a worst-case scenario, with business back to normal by October 2020, financial impacts, would be 'crippling', the statement said.
Either way, the impacts will likely see the council breaching its debt to revenue ratio limits – meaning it could not legally borrow more money to make up the shortfall and keep the city moving.
Mr Briggs said the council was already talking to Government about setting debt to revenue at a more appropriate level for high-growth councils.
Nor could the council balance its books until 2025/26 at the earliest. This is despite Hamilton City being in a much stronger position than many other councils.
"We can't be hampered by legislation that is simply not fit-for-purpose," Mr Briggs said.
The council, which turns over $378 million each year, is forecasting a reduction in consent fees, engineering fees and development charges.
It estimates money paid to the council from community facilities like pools and libraries and visitor destinations, such as the Waikato Museum and Hamilton Zoo, could drop by as much as $5 million over two years.
The city will also be hit by a reduction in infrastructure operations and increased contract costs due to work shutdowns forced by the pandemic, Mr Briggs said.
He said the council would continue to actively manage its books and that other high-growth councils, including Tauranga, Wellington and Queenstown would face similar issues.
Tauranga has already estimated that revenue for the 2020/21 year will be down between $53 million and $77 million and says it may be forced to halve its capital works programme.
Mr Briggs said decisions about capital works had not yet been made for Hamilton.
Any decisions made by elected members would take the social, environmental, cultural and economic wellbeing of the city into account and that included the impact of a drop in revenue.
Hamilton City Council elected members with chief executive Richard Briggs. Photo / File
"This information is very new, so councillors will need to digest it and factor it in to their wider thinking before they make their decisions. Decisions they make around our finances will be made as part of the Annual Plan process.
"Alongside our FutureProof partners, we have put 23 different proposals to Government to either fast-track or kickstart major infrastructure projects and we're hoping for co-funding on some of those.
"We will continue to do everything we can to work closely officials and decision-makers in Wellington as well as supporting the work being done by the wider sector.
"But until the outcome of those discussions is clear, we can't yet say what the impact of Covid-19 on capital projects will be. If we can keep those projects going – we need to.
