The West Coast Regional Council has locked in its planned rates freeze for the year, and will borrow to cover the resulting budget deficit.
Photo: RNZ / Tracy Neal
Finance manager Robert Mallinson said the council's desire to hold rates at current levels to help out households dealing with the impact of Covid-19 had left it about $750,000 short for the 2020-21 financial year.
That included a deficit of $192,000 for the ongoing work on a one-district plan which the regional council must fund through rates and other sources.
Borrowing at current low interest rates from the Local Government Funding Agency (LGFA) to cover the deficit was a better option than inflicting more pain on struggling West Coast ratepayers, Mallinson said.
"About $500,000 of the deficit relates to the impact of Covid-19 - that's the self-imposed rates freeze but I believe that was the right thing to do. LGFA rates are very low, about 1 percent or less."
Meanwhile, the council's investment fund, which subsidises council costs through interest payments, has been on a roller-coaster ride since the pandemic threw financial markets into disarray.
The fund of $10 million managed by J B Weir took a significant hit in April and May, dropping by $865,000, Mr Mallinson said.
It had almost fully recovered by June but took a second hit of 6 percent 10 days ago when the Dow plummeted.
"Once again there's been a significant rebound, but the markets are all over the place at the moment; it's very volatile."
Regional councillors were unanimous in their support for the rates freeze, but divided over the one-plan budget.
The council was charged by the Local Government Commission with managing the combined district plan project and striking a targeted rate to help pay for it.
The rate brought in $250,000 last year, but has now also been frozen.
The joint committee working on the combined district plan, made up of West Coast mayors, councillors and iwi asked for $692,000 to cover costs for the year.
That was made up as follows: Salaries project manager and planners ($248,000); consultant planner ($100,000); governance ($65,000); research ($100,000); stakeholder engagement ($17,000); communications ($10,000); legal advice ($2000); share of regional council overheads ($150,000).
Funding available for the work this year is as follows: Credit balance carried forward ($100,000), targeted rate ($250,000), existing regional council general rate contribution ($150,000).
The motion to approve the budget and cover the deficit of $192,000 by borrowing was carried by 4-3.
The dissenting councillors were chairman Allan Birchfield and councillors Peter Ewen and Brett Cummings.
Birchfield told the Greymouth Star afterwards that he wanted to limit the one-plan budget to the $500,000 in hand and avoid borrowing.
"They're going to spend it on consultants to do research on SNAs (significant natural areas). But the ratepayer should not be picking the tab up for that when only 10 percent of the land area is rateable.
"Ratepayers shouldn't have to borrow to do work the Government should be doing, when 85 percent of the land is in the DOC estate."
The one-plan committee was also planning to hire university students to do some of the SNA legwork, Birchfield said.
"They'll have students asking farmers for access so they can go and identify SNAs on their land - I can imagine how that's going to go down," Birchfield said.
He disagreed with Buller and Grey members of the committee who pointed out at the last one-plan meeting that SNA research was a legal requirement for councils, and deferring it would add another year to the one-plan project and cost ratepayers more in the long run.
Local Democracy Reporting is a public interest news service supported by RNZ, the Newspaper Publishers' Association and NZ On Air.