Auckland mayor Phil Goff has signalled that revenue losses may spark future rates rises as he unveils his last budget.
Auckland mayor Phil Goff Photo: RNZ / Dan Cook
In the meantime, a targeted rate of $58 a year for an average $1 million home will pay for council attempts to reach its climate change targets. A council survey of 4000 Aucklanders suggests 36 percent are opposed to the new rate.
Goff today released the billion-dollar package, which will go before the council's governing body later this month.
Among budget proposals on climate change are $600m for new bus services, and six or seven new electric or low-emissions ferries.
The council is now planning to use all the money from the government's first payment under Three Waters changes to help meet its funding gap.
It is facing higher costs and lower revenue due to Covid-19, inflation and interest rates.
"While these high levels of uncertainty remain, it is now clear that the revenue disruption from Covid-19 will be larger and longer -lasting than previously projected and that changes to economic factors such as inflation and interest rates have created a step change in our operating cost that is both material and ongoing," the council's budget stated.
"In short, there has been a structural increase in the net cost of delivering council services.
"Work to contain and shrink the operating budget gap, including the application of expected government 'better off' funding [Three Waters payment] and some use of operating and borrowing headroom in the short term is sufficient to mitigate the budget gap for 2022/2023. There remains, however, an ongoing operating budget gap to close of $90-$150m per annum."
It also proposed spending cuts referred to as "tactical service level opportunities", which would reduce operating expenditure by $30m from 2023/2024. A longer-term $50m of ongoing operating expenditure cut would start in 2024. The alternative would be higher rates rises, it said.
"If the higher inflation and interest rate scenario plays out then a combination of higher rates and service reductions may be required to close a $150m gap.
"Preliminary analysis of the $150m gap scenario indicated that this could be closed by the new council using the mitigations outlined above, in combination with a 4.5 percent general rates increase in each of the three years of the new council term rather than the currently planned 3.5 percent."
Future options include increasing revenue and reducing spending, although the council will receive more than $500m in total from central government when Three Waters takes over control of council water facilities.
That change also means the council will save up to $220m a year when it takes over responsibility for stormwater facilities, leading to lower council rates bills albeit higher water bills.
Council elections will take place this October, and Goff said he had no confirmed plans.
He has been tipped to become New Zealand's next High Commissioner to the UK when he finishes his term.
Goff said he was pleased to use his last budget to address climate change and make South Auckland leafier.
"Hundreds of millions of dollars more will also go towards new low-emission ferries, new electric or hydrogen buses, completing key links in the city's cycling network, delivering 35 kilometres of upgraded footpaths and pedestrian crossings to improve walkability, and planting thousands of six to eight-year-old native trees predominantly in low-income areas with low canopy coverage."