Published 11 November 2009
Auckland City Council continues on track to meet its budget target of an overall 3% rates rise for 2010, in line with its projected inflation rate.
However, the overall target is skewed for different sectors, particularly for owners of lower-valued residential property – and, conversely, downward for owners of more expensive residential property – because of rises in uniform charges.
Chief executive David Rankin made these points in his overview for the annual plan session:
The real game, the real challenge is to keep the budget to the council rate of inflationInvestment in infrastructure is the big driver behind rates increasesThe scale & scope of capital projects over the next 2-3 years is huge and probably not achievable, particularly in a period of transitionWe’ve avoided a big hit on service levels and still achieved the fiscal targets.
The uniform annual general charge will rise from $250 to $317. That’s based on the overall 3% inflation rate, not on a 3% rise in the various targeted rates. On top of that is a $3 rise to $186 for refuse collection.
Uniform charges are an ideological issue, currently being won by the Citizens & Ratepayers majority, although the previous City Vision-Labour council majority didn’t wipe uniform charges out. In short, these charges represent a standard charge for service irrespective of property value.
Against the background of the overall cost of council business being set, the capex & opex programmes being largely in place and room for little movement without upsetting the 3% target – and with councillors in the majority group generally not participating in debate – the minority was left to flail rather futilely, allowed 3 speakers against any proposal (or for their own amendments) before each motion was put.
The November annual plan setting meeting is one of a series in which the council puts together its annual budget & rates bill, plus its 10-year review, and will be followed by the final planning session in February before its last budgetary meeting in June.
The city council will post its budget at the end of June 2010, to take effect on 1 July. Its role will be taken over 4 months later by the new Auckland Council, which will replace all Auckland’s 7 territorial councils and the regional council.
Auckland City, as the dominant council in the region & with the biggest budget, is inevitably the leader of policy in the transition and the city council’s majority has been working hard to ensure its policy positions will be clear signposts for the new council to work from.
One issue before the reins are handed over is the level of consultation on the annual plan. The council majority has decided that, for a plan setting the budget for just 4 months, the council should not undertake full public consultation, confining consultation to stakeholder groups.
However, for any change in its development contributions policy the council must go out to consultation. If that happens, there will be a month-long consultation period followed by hearings on the last 2 days of March.
The council has calculated shortfalls in contributions revenue of $2.8 million for the June 2011 year, $3.7 million to 2012, and said if the contributions policy wasn’t changed that money would probably have to be met from rates.
Policy manager Andrew Pickering said in his report to yesterday’s meeting: “This option would also mean that enhancements- to better align the development contributions policy with other council strategies, and streamline transition to the Auckland Council – could not be pursued.”
The council’s city development committee decided last month that the policy should be amended, but the revised per-unit charges haven’t yet been estimated as they depend on the capital programme & growth projections being set. They will be considered at the city development committee’s December meeting.
On the assumption that the contribution levels will be raised to overcome the shortfall, the council projected a range of rate rises, varying from an overall 4.3% for residential, through 2.8% for non-residential and zero for cbd non-residential (but made up to 2.8% through the cbd targeted rate).
The council minority proposed – unsuccessfully – lower uniform charges and a different range of rates moves for each residential value percentile. For the lowest percentile (capital value $35,000) the rates move would have been a 1.9% fall. At $270,000 capital value, it would have meant a 1.4% rise. For houses in the average Auckland City October sale price range of $570,000, the minority projected a 3.4% increase (at $540,000) to 3.8% increase (at $630,000). The top level would have been a 6.9% increase.
The importance of the Auckland cbd’s role in rating terms is accentuated by the differential between residential & non-residential rates, which the Auckland City Council has been gradually reducing – non-residential ratepayers in the cbd are still paying more than double the residential rate/$ capital value.
That differential is set to be reduced to 180% by the June 2013 year, but a different makeup on the new Auckland Council could see changes in policy, particularly if the preponderance of outside-the-cbd councillors doesn’t find the same imperative to reduce the differential.
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Attribution: Council committee meeting & agenda, story written by Bob Dey for the Bob Dey Property Report.