Rotorua ratepayers will be financing a $1 million joint venture with Air New Zealand and could be forking out $30,000 a year for a homeless shelter in the city.
It may be early days but Rotorua district councillors are already divided about how much the city's ratepayers can afford to see their rates bills rise in the coming financial year.
At an extraordinary meeting of the Rotorua District Council's Corporate and Customer Services Committee councillors began two and a half days of deliberations to discuss draft budgets for the council's upcoming Annual Plan process.
Council chief executive Peter Guerin started the meeting with an overview of the upcoming year's budgets, saying a 3.5 per cent average rates increase would be a fair and reasonable starting point.
Last year councillors signalled they would try to keep any rates increases at, or below, the Consumer Price Index (CPI).
"We have done fantastically well with our rates in the past three years with less than a 1 per cent increase last year and a 1.9 per cent increase the year before. Projections from some commentators is that it [CPI] may reach 5 per cent in the coming months," Mr Guerin said.
He reminded councillors the recent global recession was the worst financial crisis since the depression era of the 1930s.
Revealed at the meeting was the council's commitment to a $1 million joint venture with Air New Zealand to boost the profile of Rotorua's transtasman airport which had been discussed and agreed on by councillors during recent confidential meetings.
The $1 million contribution was not negotiable and Air New Zealand's contribution, if any, remained confidential, according to budget documents.
Rotorua mayor Kevin Winters asked councillors to consider adding $30,000 a year to finance Rotorua's Night Shelter Trust in providing care and shelter for Rotorua's homeless population.
Councillor Mike McVicker led the charge to have the 3.5 per cent average rates increase lowered saying now was not the time to add a further financial burden on already cash-strapped ratepayers.
"We are not out of the woods yet and Rotorua has not achieved any growth. Given the economic situation ... I would like to consider if we can manage a reduction, a nil increase, or at worst a 1 per cent increase like we did last year."
Councillor Geoff Kenny suggested his colleagues remain realistic.
"There is no way we can try to grow our city and keep our airport running without an increase ... We have to face the music now."
Mr Kenny was supported by councillors Dave Donaldson, Julie Calnan and Trevor Maxwell who told his colleagues he had been on the council when former Rotorua mayor John Keaney pushed through a 27 per cent rates increase.
"That was in an election year too.
"We all thought we were heading for the departure lounge," Mr Maxwell said.
Councillor Charles Sturt said the problem Rotorua faced was a lack of new ratepayers.
"We cut out a lot of things in the last six years and we can't afford to keep doing that.
"How can we charge people for growth when there isn't any growth here? I will be signalling that there will be some cuts to this budget," he said.
- A draft version of the council's Annual Plan and budget for the 2011/12 financial year will go out for public submissions on March 31.
The public then have until May 3 to make its submissions. Annual Plan hearings will take place between May 17 and 19.
Councillors will then make final changes to the plan between June 7 and 9 and the council will adopt the final version of the Annual Plan on June 30.
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