Thames Coromandel ratepayers to be slapped with rate rise after council overspends by $12m

Thames Coromandel mayor Sandra Goudie says costs have increased "exponentially". Photo / File

Coromandel bach owners be warned - a rates increase is on the cards after the local council's operating budget is expected to blow out by $12 million in two years.

Thames Coromandel District Council will on Tuesday be asked to approve a new budget forecasting a $6.7m operating deficit this year.

Staff revised the budget after council spent a whopping $6.07m more on running the district than planned in 2018/19.

The review "identified substantial operational increases in budget would be needed to carry out the operations of council", according to the report being presented to elected members.

Thames Coromandel mayor Sandra Goudie told the Herald the costs - many of which she claimed were unforeseeable - had increased exponentially.

"These things compound and you can't have years and years and years of 1.6 per cent increase in average rates and not expect to have a bow wave of costs coming at you."

Solid waste had been the biggest surprise, costing ratepayers an additional $2.6m due to several reasons including KPI adjustments, increase sector costs and China refusing to accept glass, Goudie said.

Depreciation of roading, increased water and water regulatory requirements and the Government's requirement it put aside $900,000 for its nine landfills as a form of bond had also hit the council hard. Personnel costs were also more.

Under her leadership the council had committed to carrying out the planned capital work - an area which had previously come in under budget due to not being completed.

Goudie would not reveal how big the rate rise would be, saying she wanted it to be released to everyone at the same time.

"I'm not going to recoil from the fact that it's necessary."

While the council does bring in additional revenue through development contributions, capital expenditure subsidies and grants and vested assets, it cannot be used to pay for operational expenses.

TCDCgroup manager of corporate services Donna Holland said, in the report, that a reset of rates was "necessary" in 2020/21 to correct the gap between income and expenditure that was not reflected in the long term or annual plan.

Council management had also been tasked with making savings and identifying costs that could be spread across a number of financial years to ease the burden on the ratepayer, the report said.

In a report presented to council in October last year, elected members were told overspending was generally offset by increased revenue in another activity in the same group - but it had not been possible for all the activities in 2018/19.

The operational blowout in the first year occurred in the areas of solid waste; water, wastewater and storm-water activity; district roading activity and the Thames Community Spaces activity group.

Although 42 of the council's capital projects went over budget by $1.7m, this was recovered by the 113 projects which fell under budget by $10.1m.