$3m surplus means big relief for city ratepayers

Tauranga householders could benefit from a historic rates reduction of nearly 1 per cent next year thanks to a $3.7 million surplus in the rating account.

The good news was announced to the council yesterday and followed last week's decision to put about $3 million of the surplus into offsetting next year's rate increase.

Without the $3 million, the rates starting point for the council's 2013-14 annual plan process would have been a 2.9 per cent increase.

Figures prepared by the council's financial controller Paul Davidson showed that rates would go up by $2.6 million to reach nearly $105.4 million next year.

User fees and development charges were predicted to bring in a further $64.8 million of revenue - up nearly $2.1 million on the current financial year.

Mr Davidson also highlighted how most of next year's budgets looked even better when compared with the council's long-term forecasts.

According to the council's current 10-year plan, the rate take was expected to reach nearly $109 million - a 5 per cent increase after growth was deducted. The council was factoring in growth in the city's rateable properties of half a per cent.

It meant that the accumulated effect of cost cutting and the decision to put last year's $3 million surplus into offsetting rates has dropped the rates increase by nearly 5.1 per cent.

The recently announced city-wide revaluation carried out every three years was expected to have little, if any, impact on next year's rates demands.

The council was factoring in 2 per cent inflation for 2013-14.

Mr Davidson's figures did not include the outcome of the council restructuring being carried out by interim chief executive Leigh Auton. The impact of the restructuring on budgets would not be known until March next year. Council debt was budgeted to increase by nearly $9.6 million to $409.5 million - $7 million more than forecasts. It meant that debt as a percentage of total council revenue push ed up to 245 per cent. This was 5 per cent under the threshold which controlled the council's vital financial rating with international rating agency Standard & Poor's.