Council seeks power to borrow more

POCKETS will be deeper at Wanganui District Council if a financial rule change is approved.
The council's finance and administration committee meeting this week approved a workshop on February 17 to discuss increasing the council's borrowing limit as well as other matters relating to the draft 2006 to 2016 Long Term Council Community Plan (LTCCP).
Currently the council's own rules set a debt limit that the organisation borrows no more than two times its total rate take.
Under the proposed new rule the ratio would increase to two and a half times the total take.
Council chief financial officer Julian Harkness spoke to the Chronicle after the meeting and explained the reason for the proposed policy change.
He said under LTCCP requirements council had to plan ahead for future maintenance of assets, much further ahead than under the old annual plan system.
The maintenance had to be budgeted for in the plan and Mr Harkness said that would increase the possible cost to council immensely.
"The only way you can cover it is by upping rates, increasing user pays charges or to borrow," he said.
The policy change was to make it possible for the council to secure the money if needed but Mr Harkness said whether or not it chose to utilise such a new borrowing ability would be a decision for councillors.
"The change doesn't mean council are intending to borrow, it means it has the ability to borrow," he said.
Assistant Auditor-General, local government, Bruce Robertson said Mr Harkness was right; council's were required to plan ahead to a greater degree under the new LTCCP system brought in under the 2002 Local Government Act.
"They have to look at the costs clearly associated with delivering services properly and how they will maintain assets in the future," he said.
Councils' LTCCPs were required to plan for at least a 10 year period and the system had been introduced to ensure debt and maintenance was spread evenly throughout the generations.
"It's making sure you don't plunder the future to live now," Mr Robertson said.
Mr Robertson said councils nationwide had already gone through the LTCCP formulation process once and this was their second attempt at the job.
He said under the Act the first LTCCPs were not subject to independent review. This time round they would be audited by the Audit Office.
Mayor Michael Laws said at the finance committee meeting on Tuesday that councils nationwide, including Wanganui, had botched their inaugural LTCCPs.
When asked if councils had been less than satisfactory in creating their first LTCCPs (cause they knew they were not being audited)and this time round were pulling up their socks, Mr Robertson was diplomatic.
"It would be fair to observe that knowing the auditor will place an opinion on LTCCPs it has changed the environment in which they are put together."
He said the quality of evidence to back up plans would have to be satisfy the auditor.
The office didn't comment on the policies of individual councils, but Mr Robertson said the question for Wanganui to discuss was whether the new borrowing policy fitted the Act's requirements for sustainability.
"The question for the Wanganui District Council is whether that is a prudent limit, if two and a half times makes sense for Wanganui. That's the test.
"One of the key planks to the LTCCP is that councils have to a suite of financial management policies that set parameters. Council's need to have regard for what is prudent," Mr Robertson said.
Mr Laws said at the meeting council would have some hard decisions to make in the coming year about assets and how to pay for their upkeep.