Cities need fresh funding
Councils facing huge growth and an ageing population are looking for fresh ideas and new streams of revenue.
Local Government New Zealand said that funding growth infrastructure is council’s highest priority and that the Labour-led coalition government plans to review local government costs and revenue.
Hamilton City Council’s briefing notes on the 10-Year Plan show regional fuel taxes and infrastructure bonds are part of a new wave of thinking.
The new government is creating an opportunity for new ideas, councillors were told this month.
Unexpected growth in Hamilton has left city finances in a bind and Hamilton Mayor Andrew King has proposed a 16.5 per cent rates hike to get the books back in order.
The alternative is a staggered rates rise or to hold the line and watch debt blow out beyond $1 billion.
King is conscious ratepayers shouldn’t have to foot the ever-increasing cost of running the city.
One of his draft 10-Year Plan budget proposals is a $25 charge for out-of-towners to visit the Hamilton Gardens. The Gardens cost $2 million a year to maintain and will require years of work to bring to completion.
Hamilton City Council deputy chief executive Lance Vervoort said council staff are looking at ways to fill the coffers, including targeted rates, partnership funding and rolling back legislation on collecting development contributions.
Council-controlled organisations (CCOs) are also an option, but aside from the water CCO, council is ‘‘taking a prudent approach’’.
‘‘There are limitations to what’s open to council going forward – around local government legislation and what we can and can’t do,’’ Vervoort said.
‘‘There is the question: Does council want to compete in the free market against private business? That’s something elected members have to give direction around and how wide we go under the purpose of the Local Government Act.’’
Finding revenue without stinging ratepayers is a challenge, said New Plymouth District Council mayor Neil Holdom, who supports King’s idea of a Gardens fee.
Holdom used his casting vote to tip a split vote in favour of a $15 door charge for nonresident visitors to New Plymouth’s Len Lye Centre.
‘‘Realistically, you’ve got three options,’’ Holdom said. ‘‘Rates is the traditional one; you’ve got debt funding, so you borrow and service those interest costs; and you’ve got fees and charges.
‘‘My preference is that the users of today pay for the facilities of today and you debtfund long-term assets.’’
A key issue, he said, is the ability of the community to afford to pay rating demands.
New Plymouth rates, on average, are about $2100 per year, he said. But rate rises, in general, track above the rate of inflation, while incomes track at or below inflation.
‘‘Something has got to give,’’ Holdom said.