Reader Mike Baker says every option needs to be considered by Tauranga City Council in light of revenue drying up amid the Covid-19 crisis. Photo / File
In response to Andrew Sommerville's April 17 letter following my April 16 letter, of course the Tauranga City Council can borrow more.
But by doing so they risk the city debt being regraded by organisations such as Standards & Poors (S&P), Moody's or Fitch, with the consequence being a probable
increase in interest charged on the city's borrowings.
It is the credit rating agencies that set the debt-to-revenue ratios that organisations such as councils can accept, or for that matter not accept.
But when rate revenue is potentially down and other revenue such as from libraries and swimming pools and community facilities is down, [and] consent fees are down, regretfully something has to give. Either borrow more, charge more in rates or reduce projects and in the environment that we are currently in obviously every option needs to be considered.
The correspondent is correct that the city needs to be ready to hit the ground post lockdown but unlike seemingly the Government, the city does not have bottomless pockets and expenditure needs to be paid for from either income or borrowings.
