3.5pc rise set to blow proposed rating cap

Councillor Rick Curach. Photo / File

Tauranga rates look set to rise by 3.5 per cent this year after the council agreed to a $500,000 breach of its self-imposed rating cap.

The council's budget-setting process for 2015-16 had assumed a 1.7 per cent rise in the Consumer Price Index (CPI) but Councillor Rick Curach said yesterday that Treasury's inflation forecast to June 30 was 1 per cent. He said the council needed to make it clear when the rating cap would be exceeded or it risked the community coming back and saying "this is not right".

"I know it is politically difficult, but we have got to be upfront and honest," he said.

The rating cap introduced in July 2013 was for CPI plus 2 per cent - meaning that the council's rate increase to be confirmed on Monday would be over by half a per cent.

Cr Curach did not advocate that the council should make late cuts to the budget in order to bring the increase down to 3 per cent, but they should be stating the rationale for why the cap was exceeded.

He said it would be difficult to find the difference at this point in the process, so there was reasonable justification to exceed the cap in the first year of the 2015-25 Long Term Plan.

Cr John Robson said the council set its budgets according to what the city needed and if that exceeded the cap then they should explain why.

This week's decisions on submissions to the 10-year plan arrived at a rates increase yesterday of 3.5 per cent for the year starting July 1.