Thursday 27 July 2017
Financial challenges around balancing base operating costs, upgrades of council assets, growth requirements and potential new projects were the focus of two items at today’s Hamilton City Council meeting.
Councillors discussed a proposal in Mayor Andrew King’s Chair’s Report to defer a report into maintenance and refurbishment work at Waterworld to consider it alongside other projects in the city’s 10-Year Plan. Councillors were advised deferring the report would not necessarily affect the timings of any renewal work, but it would enable the project costs to be considered along with other projects for the city. The costs of the repair work could be significant, Councillors referring to estimates of around $13M.
Council voted to defer the Waterworld report to the October meeting of Council, or earlier, to align with the 10-Year Plan process.
How the city is funded in future years also took centre stage as Council voted to receive a Financial Strategy Assessment by PwC which identifies a significant shortfall in the city’s operating budgets.
The report took the 2015-25 10-Year Plan as a starting point and looked at the current and future economic landscape and whether the existing financial approach is the best for the city in the new economic environment.
A revised approach, using a new measure which excludes vested assets, all capital subsidies (new roads) and 65% of development contribution revenue (DC revenue), was outlined. PwC representatives answered questions on the report, noting that to maintain day to day operations and the community expectations from the last annual plan, the city faced a $12.1M annual shortfall.
This means the city would have needed to reduce costs by that amount or increase base revenue this financial year, for example by an 11.7 per cent rates increase, just to break even. This adjustment does not take into account inflation, new funding requirements in the coming 10-Year Plan, or growth challenges.
Hamilton City Council Chief Executive Richard Briggs says the report echoes, and expands on, the financial information presented to the Council in March.
“In simple terms, the costs of running the city in the future will not be covered by the rates income and user fees and charges we have budgeted,” Mr Briggs says.
“The PwC report also confirms there are significant growth pressures and a number of unfunded plans and strategies which the Council and the community will need to consider as Hamilton sets its priorities during the 10-Year Plan process,” he says.