The financial strategy behind next year’s Whakatāne District Council Long Term Plan (LTP) forecasts 10 years of low average rate rises for the District.
A report received by the Council’s Policy Committee last week proposes provisional annual average rates increases ranging between 0.55 percent and 3.79 percent, including predicted inflation effects, for the period from 2015/16 (the year beginning on 1 July 2015) through to 2025. The proposed increases are typically well below the limits set out in the Council’s financial strategy, which caps potential average rate rises at the predicted Local Government Cost Index for each year, plus 2 percent.
Mayor Tony Bonne says the financial strategy has two primary focuses - managing external debt and keeping rates increases to affordable levels.
“The principles underlying the LTP are that it must be affordable, sustainable, responsible and enabling and Council elected members are very comfortable that this strategy strikes an effective balance between people’s ability to pay and the need to maintain and renew assets and deliver quality services which provide the best possible value for money,” he says.
Provisional Average Rate Increases - 2015/16-2024/25
| 2015/16 | 2016/17 | 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 |
Limit1 | 4.24% | 4.45% | 4.53% | 4.61% | 4.75% | 4.90% | 5.04% | 5.19% | 5.36% | 5.53% |
Increase2 | 3.20% | 3.79% | 3.79% | 2.20% | 3.49% | 3.76% | 0.55% | 3.19% | 3.43% | 3.49% |
1 Local Government Cost Index plus 2% (Council Financial Strategy)
2 Average increase across the Whakatāne District, including inflation
The Council’s existing debt limit of $75 million is proposed to remain unchanged, subject to community submissions, with any loans raised during the LTP period being focused on core infrastructure and growth-related projects.
“We think it’s prudent to keep total debt at conservative levels, which will ensure that the proportion of rates income required to cover our interest costs remains below 12 percent,” Mr Bonne adds. “The forecast debt levels do not take into account any possible income from land sales, so we think there will be some additional debt funding capability available, should that be required.”
Capital expenditure priorities, financial strategies and key policies and projects for the 10-year period will be set out in the proposed LTP, which will be available for community feedback in mid-March 2015. Submissions will be considered via a formal hearing process before the plan is finalised and implemented on 1 July next year.