Waikato District Council this week adopted its 2020/21 Annual Plan with a slightly reduced rates increase when compared to what was originally proposed in the council's 2018-28 Long Term Plan.

The Annual Plan also spread a proposed rent increase for tenants living in the council's pensioner houses over two years instead of one, and introduced a temporary water rate for properties that receive water but do not currently have a water meter installed.

The council's 2018-28 Long Term Plan proposed a general rate increase in 2020/21 of 3.66 per cent. Due to cost savings directed by the mayor and councillors this rate increase was able to be reduced in the 2020/21 Annual Plan to 3.49 per cent.

Mayor Allan Sanson said that while this was a small reduction, every dollar counted.

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"We asked our staff to go away and find savings. We needed to be sure the budget had the right tension between keeping our district's economic recovery projects on track, and making sure we were cutting our cloth.

As a result no staff - or elected member - will receive a pay rise next year, and that is totally appropriate in the current climate," he said.

The mayor and councillors also acknowledged that due to Covid-19 it was right to slow the proposed rent increases for tenants of the council's small pensioner housing portfolio.

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The Long Term Plan has a target of having the pensioner housing portfolio cover itself financially (break-even), and not be subsidised by other rate sources.

To achieve this, the 14 per cent rent increase that was planned for 2020/21 was instead spread over the next two financial years.

To ensure that residents were not receiving potable water service without paying for it a temporary water rate of $335.59 was reinstated in 2020/21.

This affects only the 181 properties around the Waikato district that are connected to water supply, but are without a water meter due to the complexity of installing meters at those properties.

Overall, the costs and operating budgets that are anticipated for the 2020/21 financial year are in line with the current Long Term Plan, with cost increases and savings largely offsetting each other.

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While the effects of Covid-19 are not yet fully understood, a reduction in revenue from consenting and other activities of about 20 per cent has been factored into the 2020/21 Annual Plan budget, but this loss of income has been largely offset by increased rating growth and depreciation being lower than what was budgeted for.