By Laura Kvigstad, Auckland Council reporter
funded by New Zealand on Air
For a third time since the start of the term Auckland Council’s budget deficit has grown and now sits at $375 million.
If rates were to cover the deficit they would need to increase to 22.5 per cent – an increase Mayor Wayne Brown is trying to avoid.
“Councillors need to be part of a balanced solution that does not involve just hiking rates or adding to our debt mountain,” Brown said.
“The budget proposal that was consulted on called for a mix of spending cuts, rate increases, the sale of non-earning assets like the airport and the modest use of debt. All of these have their place.”
The controversial budget proposal received the largest amount of feedback for any public consultation at council with 41,146 responses.
Supporters of all reductions were a minority with only 17 per cent of responses while 39 per cent were against any reductions and instead wanted further increases to rates or debt.
Brown said that the hole would continue to grow in the years to come unless council could get on track for financial sustainability.
He attributed the shortfall to council’s debt, increasing interest rates and inflation, and the previous council taking a one-off funding to cover the last year’s shortfall.
Brown is referring to the $127m of Better Off funding, a Three Waters reform support package, which council used in order to balance the 2022/2023 budget.
At the Governing Body on April 27, Deputy Mayor Desley Simpson asked council staff whether that funding could have filled this year’s budget deficit.
“The government has cancelled their second tranche of funding. If we were to have got that second tranche of funding, is it true to say we would not have the $295m dollar hole?” Simpson asked.
Chief executive Jim Stabback disagreed with this however. “We had not counted on that money in our forecast. It would not have been paid to us until after the close of this financial year,” Stabback said.
Chief financial officer Peter Gudsell said a one-off payment would not solve the long-term operating gap at council.
“While you would never look a gift horse in the mouth and the money would have been useful, it would not have solved the ongoing operating gap just like it did last time,” Gudsell.
The next Governing Body meeting is on May 25, where Brown will present his final proposal for the 2023/2024 budget.
