Auckland Mayor Phil Goff is signalling a 3.5 per cent rates increase, despite a majority of Aucklanders saying they want rates to rise by 2.5 per cent or less.

"We need to match our spending to our reduced incomes," Goff said ahead of tomorrow's meeting to finalise the council's "emergency budget".

Goff said the 21 Local Boards supported a 3.5 per cent rates increase, as have most councillors, and that is why the proposal this year is for a 3.5 per cent rates rise.

Aucklanders had a different view during public consultation on the budget.

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Two out of three of the nearly 35,000 submitters called for a rates increase of 2.5 per cent or less. One-in-four wanted a rates freeze and 9 per cent a rates cut, many citing financial hardship and the impact of Covid.

Just 28 per cent backed the option for a 3.5 per cent rise.

Goff said councillors have worked to plug a $750 million fiscal hole and tried to come to a consensus on where to prioritise spending and make cuts.

"None of these have been easy decisions, but as governors of this city, we have to make the hard calls," the mayor said.

The original $500m budget hole had been made worse by an extra $224m to find for the city's water infrastructure to reduce the risk of severe water restrictions with forecasts of a dry spring and summer.

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At the time of public consultation, the council did not know about the extra $224m, he said.

"I appreciate that some people will be suffering as a result of Covid-19; that is why we are setting aside $50 million for rates relief and also suspending the targeted rate on visitor accommodation.

"Council has to become a leaner and more adaptable organisation. With a reduction already of over 600 temporary and contract workers, there will be a further reduction of over 500 permanent jobs. Staff and elected members have taken salary cuts and budgets for non-essential spending slashed.

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Auckland Mayor Phil Goff is preparing a 3.5 per cent rates increase. Photo / Michael Craig
Auckland Mayor Phil Goff is preparing a 3.5 per cent rates increase. Photo / Michael Craig

"Cuts have been made in services and investment in some infrastructure projects have been deferred, reducing spending by hundreds of millions of dollars," Goff said.

Finance committee chairwoman Desley Simpson said councillors will land a budget tomorrow "which doesn't cripple our future but assists Auckland's rebuild post Covid-19".