Councils move to zero rates increases
Tasman District Council has dropped a planned 2.97 per cent rates revenue rise to help people struggling with the effects of the coronavirus pandemic.
The Nelson City Council is also eyeing a rates freeze, but has to seek public feedback before it can confirm the plan. Both councils say they will lose several million dollars but are looking at ways to cut costs, including no pay increases for staff.
At a Tasman council meeting held via audiovisual link on Thursday, councillor Kit Maling moved a foreshadowed zero rates revenue increase for 2020-21 and the other elected members agreed.
That zero rates revenue increase, excluding growth, is expected to translate into an income loss of about $2.3 million for the council in the first year.
When combined with anticipated lower dividends from Nelson Airport and Port Nelson along with a predicted drop in income from the council’s commercial activities, the ‘‘ballpark’’ shortfall is tipped to be $5m.
Mayor Tim King said it would take an enormous amount of work but ‘‘I absolutely think this is realistically achievable’’.
Councillor Anne Turley said many ratepayers were struggling to pay their rates before the Covid-19 lockdown and economic downturn.
The council could take the time to re-evaluate its core services and activities.
‘‘We can work smarter,’’ Turley said.
Deputy mayor Stuart Bryant said the effects of the pandemic were a challenge for all communities and sectors ‘‘particularly our elderly and rural folk’’.
The political decision for a zero rates revenue increase came despite a warning from council staff in a report that the move could lead to bigger rates rises in future years.
‘‘A zero rates rise means that the council must respond to the reduced commercial income, fees and charges income and the $2.3m in rates in one year,’’ the report says. ‘‘This will be very difficult without running a deficit that will need to be paid off by future ratepayers.’’
The council would need to revisit its financial limits.
‘‘Going forward, it is highly likely we will breach our selfimposed 3 per cent annual rates rise limit and there will also be even more pressure on the $200m debt cap in addition to our increased working capital requirements,’’ the report says.
Potential savings for the 2020-21 year listed in the report included discussions about a zero staff pay increase, deferring capital expenditure not already contracted for, and reconsidering potential future investments.
Nelson residents will be asked for feedback on a rates freeze or the original 3.7 per cent rates increase.
In an extraordinary Nelson City Council meeting held over Zoom on Thursday, councillors voted to extend public consultation on the draft annual plan until May 6 after settling on the two rating options in response to the coronavirus lockdown.
The likely zero per cent increase means the council would have to save $3 million, including the prospect of no pay rises for council staff.
The original draft Annual Plan put out to the public just weeks before the national lockdown included a 3.7 per cent rates increase. At the time councillor Mel Courtney proposed a zero per cent increase, but did not achieve enough support to have his amendment added to the draft.
Mayor Rachel Reese said that a zero per cent rise was now the right thing to put to the public.
‘‘A zero rates rise will be one of the options I’ll be asking councillors to support, it is my preferred option,’’ she said.
Council chief executive Pat Dougherty told the meeting he had had a full-staff Zoom meeting with over 200 council employees to tell them that they would all be facing a year with no annual pay rise to help cover the sudden $3m shortfall.
‘‘There are many people in the community unemployed or under reduced incomes, and this is not the time to be looking at wage increases ... I was humbled by the support from the staff.’’
Reese said this type of financial ripple effect, among others, was why a rates freeze could not be undertaken lightly.
‘‘This discussion is why you don’t call for a zero rates rise without significant thought. There is a time to call for it and there is a time when it’s not appropriate, and I think we’ve got the timing right.’’
Though councillors voted unanimously in favour of putting out the new reductions out for public consultation, a zero per cent increase was not universally welcomed.
Councillor Pete Rainey said it was a ‘‘mandatory symbolic gesture’’, and was concerned that it would push a financial ‘‘bow wave’’ of increased costs onto the next financial year.
‘‘We’ve got a lot of people who like the sound of a zero rates rise but certainly won’t like what it leads to later on.’’
Councillor Tim Skinner echoed his concerns and wanted the council to look into more ways it could ‘‘cut cloth’’ to reduce expenditure, rather than simply delaying projects until the next financial year.