Covid 19 economic impact: Napier council proposes rate increase and dipping into reserves

Napier Mayor Kirsten Wise said significant rate increases were not an option, given the hardship faced by ratepayers. Photo / File

Napier ratepayers face an average rates rise of 4.8 per cent this year.

A unanimous vote determined the preferred option at a Napier City Council meeting on Thursday. Ratepayers will have the chance to give feedback in mid-June on the proposed increase.

Mayor Kirsten Wisehas said larger increases, to cover the economic impact of Covid 19, were not an option.

The council is to continue looking at larger plans such as aquarium and pool projects, with projected combined costs of over $80 million, but will target Government and private sector funding.

Councillors decided that not increasing rates amid the Covid-19 crisis would have a detrimental impact on the city and could add to future costs.

"The impact of Covid-19 on council business activities, plus the loss of council income and the proposed relief package has resulted in a total rates impact of 11.96 per cent, in addition to the original proposed increase of 6.5 percent,'' Wise said.

"Recognising the hardship faced by our community at this time, this of course was never an option and we have worked very hard over the past four to five weeks to reduce this.''

The new plan goes to public consultation before a final decision, but council staff have had to trim costs amid revelations that if the council absorbed all the costs of the Covid-19 crisis in Napier it could have had to impose an increase of over 14 per cent.

Councillors discussed a report outlining details of the financial impact of the crisis on the 2020-2021 budget, along with the effect on services and operations.

The impact of Covid-19 on council finances has been significant, with an anticipated rates deficit of around $3.1 million for the rest of 2019-2020 and lost revenue of $7.5 million the following year.

The pandemic means the council is facing a funding gap, the council was told.

Much of the forecasted lost revenue is because of closed tourism and community facilities, halls, sports grounds and pools, as well as reduced regulatory income.

The preferred option is a rates rise of 4.8 per cent with the recommendation to fund the operating gap of $6.74 million from Parking Reserve ($4m) and Suburban and Urban Growth Fund ($2.74m).