Timaru District Council's level of debt questioned during draft annual plan consultation
Tuesday, 30 May 2023
Concerns over its level of debt and the burden to future ratepayers were raised as councillors agreed to a lower-than-flagged rates increase, at a Timaru District Council meeting on Tuesday.
Ten submitters addressed councillors on the draft annual plan in the morning, before the document was discussed.
Councillors voted unanimously in support of endorsing the draft annual plan with the amendment of a proposed rate decrease. This would take the average increase down from 12.5%, but by how much was yet to be determined.
Seventy-eight submissions were received on the consultation document, with the need for the council to be fiscally disciplined and focus on its core roles a common trend, as were calls for a rate rise in line with inflation.
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Councillor Allan Booth said the plan’s proposed net debt of $230.616 million was a concern “taking our ratepayers out to unchartered territory in terms of debt’’.
“We will be burdening our future ratepayers,’' he said.
He also questioned the projected increase of income from $112m to $132m.
“Is that ambitious?’’ he said.
He said in the past, capital expense had been paid back within 20 years, but some of what the council was looking at was being paid down over 80 years.
“I’m unsure how we’ll pay that debt back.’’
Council group manager PaulCoopersaid it modelled its fees on the previous year and anticipated it would recover a certain amount of revenue.
Some of this would be made up from the animal control unit, as a lot of people were not registering their dogs.
He suggested this may be because of the cost of living.
“I am confident we will recover the revenue.’’
Councillor Stu Piddington asked how much the council would need to spend to go over its debt limit.
“If we had to spend another $10m unforeseen would that take us over?’’
Council chief executive Bede Carran said it could go into debt up to $280m - “give or take’’.
Proposed changes to the Resource Management Act 1991 fees and charges were also discussed, with Cooper saying the council “in terms of consents’’ was operating at a “considerable deficit’’.
“Against that backdrop we have looked at what it’s costing us and what the ratepayer is covering on behalf of customers,’’ he said.
“There is an equity issue that needs to be addressed.
“We are not recovering what we should be.’’
Cooper said as the council “don’t have bums on seats’’ consultants were used to process consents.
He said the council was not passing on the full cost of that, and gave the example of a consultant charging $220 per hour, and the council only charging that back to the user at $135 per hour.
He said a rate where the council could recover more was being sought.
“We’ll always need consultants.
“Just before we notified the plan last year, there was a significant rise in subdivisions through the door.
“You will always need the consultants, but we’re trying to minimise the use of them.’’
Piddington said he believed the costs should be put on to those using them
“We keep hearing we need consultants.
“It should be user pays
“If we have to use consultants, someone should be paying within that user pays group.
“It’s sounding all a bit Mickey Mouse really.’’
He asked how much the council was behind financially, in terms of the money not being recovered when a consultant was used.
Cooper said it was between $300,000 and $400,000 on the consenting side alone.
Carran said they needed to recover more to get to a “sweet spot’’.
Cooper said the council charges for monitoring and has compliance and monitoring officers.
“We cherry-pick what they do and respond to matters when they come in.
“To provide that service we do that by charging the rate.’’
Piddington also queried the timing of some projects, questioning why the Sophia St car park building was being rushed when the council had said the building was safe.
“Perhaps the car park could wait six or seven years?’’
Bowen said the budget for the car park was for a “worst case scenario’’ and said Piddington raised a good point
Carran said the cost of carbon credits would be lower this year, and Bowen said ratepayers were looking for savings.
Councillor Sally Parker moved that the draft annual plan be endorsed with the amendment of a proposed rate decrease.