The curse of covid on council - have your say on the emergency budget

You’ve probably already heard about the half billion dollar gaping hole in Council revenue. Just as we were priming up to deliver big in the next financial year, the nation-wide lock down has hit us in the coffers and things are gonna bite.

There’s a misunderstanding that our rates pay for all that council does. This is not so. Council gains revenue from all manner of things; public transport, parking revenue, Airport shares, ticket sales, leisure centres etc. These various revenue streams make up 60% of council spending. With a dried up revenue stream through lock down and no ‘back to normal’ in sight, this cash flow will be a slow dribble over the next 18 months compared to what it was. 

Any major infrastructure and transport projects, significant events and great local initiatives will be put on hold, unless they’re already committed. Local Board budgets will experience cuts and our council services too will be given a bit of a shave. The Governing Body has worked closely with Local Board chairs to discuss what the economic outlook is and listened closely to what each local board can or cannot tolerate in terms of cuts.

To set ourselves on a path to recovery, there are four ‘levers’ we can pull in order to strike a balance, get out of debt and be financially resilient in the event that any other surprises come our way in the future. Those levers are:

1. Reduced capital investment: Projects not committed financially will be deferred for at least 12 months. In our case that includes the Lake Road upgrades. We will be slower to upgrade or improve parks and facilities, focusing instead on just H&S so that they can extend their lives.
2. Reductions on operating expenditure: This might be a few days a week with shorter library hours, or swimming and leisure programmes being cut etc. We’re not too sure exactly what that’ll be and it will be dependent upon what rates increase people are willing to pay.
3. Increased borrowing: Auckland Council already operates a debt to revenue ratio that’s pretty much at their 270% limit. More debt means an impact on our ability to borrow in future, and also means future generations might end up footing the bill more than we feel comfortable with.
4. Asset recycling (selling) – Auckland Council has $50 billion worth of assets and not all are created equal. There’s opportunity to sell underperforming assets and release their value.

 
So this emergency budget is asking homeowners how they want to move forward. Two options are being proposed regarding our annual rates increase. We were due for a 3.5% for the next financial year, but with more people out of work, this could be a big ask for some. So Auckland Council is asking about whether your preference is for 2.5% or 3.5%. Built into the proposition is a 12 month rate postponement for those that need it. The difference in real terms for the average householder is $1.35 per week vs $1.82 per week. However the changes to services based on these two amounts is quite enormous – so whilst I totally understand the heat we may be experiencing, my personal preference is that we go for the 3.5% as originally planned. A higher rates increase means less council debt, and a faster recovery of our core services.
It’s a tough time right now, and I guess my feeling is that if we continue tackling these big issues with the same resolve that we employed to tackle the pandemic itself, then we will recover faster. That said, I would hate to be tone deaf and knowing that many took the rates relief, I know that an increase in rates will be making some stomachs flip - so whatever you do, be true to you, but most importantly have your say. 

Click here to have your say.