Rotorua council's coffers will be squeezed even if a proposed 5.7 per cent rates rise is signed off, as the district council says it is being asked to do "more with less".
Council organisational enablement deputy chief executive Thomas Colle made the comment in a full council meetingyesterday .
Following a unanimous vote, the council will release a public discussion document on year two of its 2021-2031 Long-term Plan, which sets out the council's budget for the 2022/2023 financial year – an effective annual plan.
Colle said the proposal for year two, which would be released for public engagement on April 11, was "no real deviation" from the Long-term Plan adopted last year.
He said inflation – 5.9 per cent for the fourth quarter of 2021 - was a risk to the organisation, and was forecast to be "closer to eight per cent".
"That has significant impact on the resources we require.
"Within the Long-term Plan, we haven't provided for any significant uplift of our cost base to meet ... inflationary pressures, so we are therefore asking our organisation to do more with less."
Colle revealed a five per cent rate increase was floated in a closed-door workshop, and "the mayor advocated quite strongly … whether that was right for the community".
He said it was risky to propose a lower increase as there was inflation uncertainty.
"Our resource consenting has extra demands on it, we're doing some plan changes [for] housing initiatives."
He said central government-led changes, such as Three Waters reform, put the organisation "under even more pressure" as it drew on staff resources.
He said the 2022/2023 financial year was "a significantly big year" for the council's capital works programme, but "on par" with the current financial year.
The programme included $44m in asset renewals, the upgrade of the wastewater treatment plant and the Tarawera and Rotoiti – Rotomā sewerage schemes.
Rotorua Lakes Council organisational enablement deputy chief executive Thomas Colle. Photo / Andrew Warner
It also included the completion of the lakefront redevelopment and renovations of the Rotorua Museum and aquatic centre.
"We will be taking on a good portion of debt to support that capital works programme."
Debt would increase over the 2022/2023 financial year by about $84.4m, his presentation stated.
That included $18m for the wastewater treatment plant, $13m for the aquatic centre and $7m for the museum.
"We're still below our debt cap. We are forecast to creep closer to that in the next three to four years as our capital works programme continues."
His presentation showed general rates and targeted rates would see a 5.7 per cent increase under the proposal – a funding increase for the council of $3.8m and $2.3m respectively.
In the meeting, councillor Tania Tapsell said she was concerned about the council's ability "to deliver", given the various challenges.
"It would still be prudent, I believe, to … reprioritise and potentially cut back on planned spending for projects that are outside of our core services."
Rotorua district councillor Tania Tapsell. Photo / Andrew Warner
Colle said the capital works programme was part of core services as it was based on the Long-term Plan.
He said a third of the investment was into existing infrastructure and renewals.
"We have to forge ahead with that to ensure our infrastructure stays at the level or improves."
He said it would be hard to identify which project should not go ahead but elected members could decide that.
Councillor Sandra Kai Fong said it seemed there was a "real risk of under-performance" to deliver projects and being "over-budget" at the end of the next financial year.
Colle said it was "going to be incredibly difficult".
"You could scratch away at some minor savings but to put significant savings in to free up more money, you're actually going to have to stop something or turn something off.
"Therefore, taking our existing cost base, not inflating it in line with where inflation is heading to be, will put the organisation under immense pressure."
Rotorua Lakes Council's debt profile. Supplied / Rotorua Lakes Council
Council chief executive Geoff Williams said there was a tendency for people to want to decrease uncertainty by "making change now".
"The problem is, to make change now … we have to make decisions with regards to removing or slowing down the delivery of different services … and therefore reducing the value, if you like, the organisation delivers for the community."
He said officials advocated an approach of actively adjusting work programmes in response to issues over the financial year.
Council district leadership and democracy deputy chief executive Oonagh Hopkins said there wasn't a legislative requirement for a formal consultation on the plan as it did not significantly deviate from the Long-term Plan, but the council would hold public engagement from April 11 to May 6.
"There is a really good opportunity here to be going out to the community to show that you are sticking with the direction as set in your Long-term Plan."
She said it would focus on digital engagement with some face-to-face events.
Councillor Reynold Macpherson said there was a "contrary view" to "sticking to the plan".
"We need to emphasise a capacity and a willingness to adjust our plans in light of the multiple and quite bizarre crises that have been faced by our people."
Tapsell asked if the council was able to adjust the Long-term Plan to reprioritise, and Colle said it could.
In the meeting, the council also approved councillors Fisher Wang and Mercia Yates to travel to the Local Government NZ conference in Palmerston North in July.
Wang and Yates would attend the conference alongside Rotorua mayor Steve Chadwick, deputy mayor Dave Donaldson, Williams and Te Tatau o Te Arawa deputy chairman Rawiri Waru.
A report for the meeting stated early bird registration for the conference would cost $1400 per person, including attendance, a delegate bag, daily catering, a welcome reception, and attendance at a conference dinner and awards.
The meeting also released two previously confidential items, both decided in mid-December.
One was an extension of cost and time for an "infrastructure" project. It was to be extended by $3m to a total of almost $7.4m, and two additional years.
The other awarded a three-year "minor stormwater works" contract to Goodrick Contracting for more than $3.3m.
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