'Hard decisions' for council as it fronts up to deficit

Thursday, 14 November 2024

Overspends and failing to budget for essential services have helped push the Tasman District Council $5.5 million in the red.

The deficit at the end of the first quarter is $2.4m worse than expected, and comes as council managers have been forced to admit that several services - including emptying rubbish bins and street cleaning - hadn’t been budgeted for in the long-term plan.

Meanwhile, several departments have recorded overspends of hundreds of thousands of dollars.

Now, chief executive Leonie Rae is warning the council will need to change the way it operates.

The numbers were revealed in the council’s quarterly financial report, presented at a meeting on Thursday.

Rae said reductions in staff were “one lever to pull”, but the cost of redundancies were sometimes counterproductive and cost savings had to stand the test of time.

“We don’t want to be here every year, so we need to make some enduring changes.

“Quick sugar hits are great and might help us in the short term, but we do need to change how we operate into the future.”

While Rae said she didn’t use the word recruitment freeze, the council was looking seriously at every current vacancy.

Deputy mayor Stuart Bryant asked about the under-budgeting of $230,000 for street cleaning and litter bin servicing costs, which seemed “quite a lot” when it was a regular occurrence.

Group manager community infrastructure Richard Kirby said during the LTP process those two items got “zeroed out”.

“There was a feeling that we should do it, so it’s a should, we delete it. When we actually came to look at it … there was no money there at all.

“I just put it down to the processes that we implemented and the rushes we did to try to save. In the spur of the moment someone has made a call and not checked back with [transportation manager] Jamie [McPherson].”

Kirby said in the water space, the same thing happened the tune of about $390,000 in routine maintenance.

“We've done as if we should do it, when in actual fact, it's a must, because we don't get our qualification with Taumata Arowai (New Zealand water services regulator). Those were zeroed out as well.”

Chief financial officer Mike Drummond said the council was looking at pushing out capital works to reduce debt and interest costs.

Drummond said they were reviewing fees and charges, focusing on collecting debts earlier, and reviewing budgets at all levels.

“It may well be that we need to make a step change in some levels of service,” he said.

The council was seeing the impact of a drop in income from forestry, meaning that the income to help it through its deficits and external price shocks was not there, he said.

The “must, should, could” approach the council took to the Long Term Plan budget meant that each council department and area had less resilience and a higher risk strategy as it made it harder for the council to respond to things outside of its control, he said.

Rae said “hard decisions” would have to be made by the council and staff to bring the organisation back in on budget.

Asked his reaction to services such as litter bin servicing and street cleaning being unbudgeted for, King said he was “less than thrilled”.

“It is immensely frustrating when things get either missed or left out, but that is one of the challenges. It's a complicated business with lots and lots of different services and a whole range of different funding sources.”