By Matthew Theunissen for RNZ

The Government is stepping in to fund nearly $200 million of Auckland Council projects as the council struggles to plug a $750m hole in its budget.

The announcement follows weeks of frustration for councillors who wanted to know the level of support they would receive from central government ahead of their meeting on Thursday, when they decide perhaps the most daunting budget in the city's modern history.

Minister of Finance Grant Robertson and Minister of Transport Phil Twyford sent a letter to mayor Phil Goff last night outlining the Government's commitment to the city.

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As part of a $500m investment in Auckland, the Government will provide $98m in transport projects funded or partially funded in the council's emergency budget and another $98m in transport and three waters projects, which are not going to be funded in the upcoming emergency budget.

Only the first of these investments goes towards clearing the council's $750m financial shortfall, which arose due to the region's drought and Covid-19.

The remainder of the $500m will go towards projects not carried out by the council, the only one of which to be announced so far being $22m for a new Auckland City Mission premises.

Goff welcomed the news, which he said would allow the council to reduce the cuts it needed to make to infrastructure projects.

"That means we can create jobs, we can create new assets for Auckland and we can stimulate economic recovery at a time when Auckland and New Zealand as a whole really needs that extra boost to get out of the Covid-19 recession."

However, he said the funding boost did not affect the need for a rates increase of either 2.5 or 3.5 per cent. Nor did it make it necessary for further public consultation on the matter before Thursday's budget meeting.

"When we went out to consultation we were looking at a $500 million deficit in our budget, because that was the level of income we are losing in the current financial year," Goff said.

"What we hadn't covered in consultation was an additional $239 million, which is the cost of putting in place new water treatment plants to help stave off a severe water crisis caused by the prolonged drought."

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Councillor Desley Simpson, who chairs the Finance and Performance Committee, had been frustrated by what she saw as a lack of consultation by the Government on what would be provided to support the city through Covid-19.

"It was almost rude. You know, they'd come back and say, 'Apologies, we can't get to you today, we'll be there next week, just give us another couple of days', but just have no response," she said.

"I was pretty upset. I'm trying to put a budget together with our finance team that gives our councillors options and to have nothing, noting that we received this [last night], so we have Tuesday and Wednesday and the decision is made on Thursday. So it's pretty tight to the wire."

Simpson was grateful, nonetheless, for the money allocated to Auckland and the council.

"I think the devil's in the detail here and what I need the detail around - and our finance team will look at this [today] - is: is this all new money, or is this money we've kind of already known we had anyway? I just don't know that yet."

The letter from the Government ministers to the mayor says officials are working through the final details of the projects and expect to be able to provide further information shortly.

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- RNZ