The total rates take in Tairawhiti could increase by 6.5 percent annually for the next three years, backtracking on a commitment to keep rises to a 5 percent maximum.
Gisborne District Council said it would cap rates rises at 5 percent in its 2018-2028 Long-Term Plan, but a paper before councillors today recommends it be upped to 6.5 percent.
Three workshops between councillors and staff in November have led to the recommendation for new financial limits to be included in the draft financial strategy. This strategy will come before the council in January.
It recommends total rates revenue increases by a maximum of 6.5 percent per annum for the first three years of the 2021-2031 Long Term Plan, “with the potential” to reduce this to 5 percent from the fourth year.
This comes after the council took a “back to basics” approach to rates in 2018 — committing to a 5 percent rates increase limit.
Risks included in the paper said the recommended increase was likely to “create concerns around affordability among many ratepayers”.
“Council needs to be clear about what we are proposing to use the increase for and why this is essential. For instance, making clear our legislative requirements and urgent responses needed following changes to national direction, and renewals of critical infrastructure over years one to three,” the paper said.
The paper said the council had some “intense challenges” in funding infrastructure over the next 10 years, including new water infrastructure for wastewater management which was needed to meet legal requirements.
In addition, there was a new financial landscape for Tairawhiti and Aotearoa due to factors such as central government driving legislative reform and posing new requirements for resource management, central government's declaration of a climate change emergency, the Covid-19 pandemic and anticipation of growth in the region.
The draft financial strategy proposes an initial spend in the early years of the Long Term Plan on critical infrastructure and increasing debt levels to enable this.
“Once over the infrastructure hump, the council aims to reduce debt and focus on maintaining our reserves,” the paper said.
It comes as the council works through the “prioritisation” phase of the Long Term Plan, which will be adopted in June 2021.
Other proposed recommendations in the financial strategy are to extend the council's historically low debt levels to enable funding of “critical” activities and infrastructure. This would align the council's debt with that of other councils.
The paper also recommends the council “keep an eye on the future”, providing for forward planning for climate change and key resource management services.
It also seeks to support growth in the rating base within the council's current infrastructure footprint and to progress securing funding from alternative revenue streams.
Gisborne District Council chief executive Nedine Thatcher Swann was approached for comment yesterday, but said she would release a statement following the discussion with councillors today.