Hastings District Council is proposing the unusual step of taking out a $3m loan to pay for road maintenance work over the next three years and plans to ask New Zealand Transport Agency (NZTA) to pay back the loan at the end of the term.
The council had budgeted $6.1m for road maintenance over three years but NZTA had withdrawn its share of the cost, a subsidy of about $2.9m. This week, the council had to decide whether it would continue with the roading programme unsubsidised or bank its share, about $3.2m, until NZTA reviewed its next budget in 2015.
Hastings mayor Lawrence Yule said NZTA had withdrawn funding from councils such as Hastings, which had good road assets, and instead the funding was being channelled to councils which had poor roads and needed urgent work.
"What is happening is that councils which have a good or high quality of road maintenance are being penalised and those with poor standards given more money. What we have in Hastings is a high level of asset management because our ratepayers have put significant resources into our roads."
The council decided on Tuesday it would use $108,000 for work on road safety improvements which did qualify for NZTA funding of an additional $180,000.
"So we have said we will spend some money on extra safety measures but the rest will go into a reserve in the hope in the future we will get back that NZTA funding.
"I have also suggested the council take out a loan which is equal to the NZTA share, for maybe three years and then NZTA pay it back at year three. Then we could get on and do all the work that was planned."
The council agreed it would write a letter to NZTA, proposing the loan as a "last stand" to enable the planned three-year programme. Mr Yule said roading contractors were "struggling to find work" at the moment and the council was keen to provide projects for tender.
"There has never been a better time to get a good price from contractors for this type of work."
Speaking in his position as president of Local Government New Zealand, Mr Yule said other councils nationally were dealing with similar situations.
"Councils are having to stretch out the life of their roading assets, which can be done for the medium term. In the long term, we're likely to hit a wave on maintenance costs. We don't want that to happen."