John is a senior reporter at the Bay of Plenty Times

Tauranga's debt set to jump next year

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Tauranga City Council is expecting debt to increase by nearly $64 million next year to hit a high of $393.8 million.

The proposed 2016-17 Annual Plan has the city's debt open at $330 million on July 1 and then grow by $63.8 million over the next 12 months.

Debt figures, which played a pivotal role in the shock clean out of the old council at the 2013 elections, feature in the draft Annual Plan due to be signed off by the council today.

The Annual Plan will then go out for public consultation.

The overall debt situation, when compared with the council's long-term plan, looked to be heading in the right direction.

Long-term projections had debt at July 1 this year reach nearly $355 million - $25 million more the figure in the 2016-17 draft Annual Plan.

However the $63.8 million debt increase in 2016-17 was $8.5 million or 15 per cent more than projected in the long-term plan.

The vital ratio of debt to revenue was estimated to reach 205 per cent, or 12 per cent less than the figure in the long-term plan.

This means the council's debt will be more than double annual revenue of $188.4 million at June 30 next year.

Debt to revenue ratios were important financial indicators that impacted on interest rates the council paid on its loans. The council's self-imposed ceiling was 250 per cent.

- Bay of Plenty Times

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