It's expected the council's non-rate income – which generates over half of its revenue – will be significantly affected by the economic downturn, including the investment incomes used to offset rates.
As a council back in March, we quickly instructed staff to investigate a zero per cent rates increase to help the Hawke's Bay recovery.
The combination of a forecast fall in investment income, and rates revenue, means we are now looking at up to a net $7.58 million revenue decline.
The need to borrow this forecast shortfall and to make it up in future years meant our decision to stick with the zero per cent rates increase was a 3-4 split between the councillors. I was happy to stick with no increase to rates revenue as that is what we had indicated to the public and was supported by community feedback.
With regards to rates, though, and looking out to future years - and particularly where we have come from over the past three years – there will be some strong debate around the Long Term Plan. After quite substantial rates increases and a push from some councillors to continue to add new levels of service, I see an unsustainable level of rate increase well over and above inflation for years to come if we remain on this path.
The Long Term Plan process is due to start and I will be looking for feedback on these points in particular before we even get down to the strategy detail about implementation.
To keep the same levels of services will mean around a 10 per cent rate increase next year. And councillor Rick Barker's proposed Climate Mitigation Unit will add a further 2.5 per cent increase to your rates.
This continual rate of increase is an unsustainable financial model.
What levels of service do you, the community of Central Hawke's Bay, require? Is the regional council carrying out its core responsibilities well before adding so many new services?
I look forward to your engagement over the next 12 months.
