Revenue & Finance Policy - Ten Year Plan
Friday, April 15, 2011 at 4:03PM
Bill Barclay

Staff were instructed at today's special Finance and Revenue Policy Meeting to iimplement the rates and borrowing policies set out in the two 11 April posts on the subject, with one significant change - the borrowing limit was raised to 150% of rates revenue on external borrowing only, not total revenue as earlier signaled. This will have the effect of allowing a further $55m. instead of $60, to be raised through the banking system.

In addition, a second limit has been placed limiting interest 15% of rates revenue. Thus, interest payments should not exceed $10.8m. 

It is of cold comfort that this second limit was imposed - all the Council's borrowing is on short to medium term (0 - 4 years), with at least half this amount due to roll over or be re-negotiated over the next two years. Forecasting interest rates is hardly an exact science, and were the full additional $55m. borrowed, as one can assume will happen based on Councillors expressed spending ambitions, then the interest bill will begin to have a severe effect on rates. The additional borrowing will provide substantial additional risk to TCDC, regardless of the soothing assurances of financial 'advisors'.

Councillors took heart today from advice provided by Philip Jones - the Tauranga Chatered Accountant appointed to the Audit Committee in February at the instigation of the Mayor. He opined that TCDC's borrowing policy was 'conservative' for a 'growth' council, and could well stand the planned additional borrowing. This advice was avidly accepted by Councillors, who had struggled with the idea of adopting the proposed rate increase of LGCI (Local Government Cost Index) + 2%.  Some councillors had shown themselves truly out of their depth during this debate - Cr. Connors indicated that she was "happy either way". Cr. Wells indicated that he would "go with the majority". In the end they all fell into line, though Cr. Bartley and Cr. Brljevich were clearly unhappy with the +2% idea - the latter had abstained from the vote on additional borrowing. 

Come the October deliberations on the Ten Year Plan, there will be some substantial spending proposed that will make full use of the $55m. - of that you can be sure. Apart from some severe warnings about the current economic situation from a couple of Board Chairs, it was almost like deja vu all over again, and any spending limits to be imposed by Central Government in the June Budget will certainly not resonate with similar restraint in this District - what the people want, the people must get!

There is clearly a felt need to satisfy election promises - BC Peters 'dry court', and swimming pool were  mentioned, along with Cr. McLean's grand Whitianga sports ground and cemetery plans, and perhaps something else in the background of far grander proportions. Expect others to match these wish lists come October in order to get their share of booty.

Rate-payers won't feel a thing until the first bill comes in reflecting the new rates level, and the  depreciation and interest bills that will accompany the new capital expenditure on these goodies - never mind the huge proposed outlays to meet water demands in Tairua/Pauanui, and Matatoki/Thames Valley. Cycleways, aquaculture infrastructure and many others are also on the programme.

The remainder of the day seemed to be devoted to establishing ways in which constituents could have their rates burden relieved by cutting out stormwater charges in areas where they have long been claimed an unfair imposition, such as Te Kouma and Whangamata, and eliminating double rating on properties where there are two living units. But fear not, the Mayor is determined by hook or by crook to nail all those B & B freeloaders who are not paying their fair share (and incidentally, unfairly competing with other legitimate accommodation providers such as moteliers). 

Cr Hoadley and Cr. Connors were gone by lunchtime, presumably to other engagements - not a good look, and I took-off at 3.30pm before the Development Contribution Policy came up - the proposals look fairly innocuous, but may need closer examination as the second and third recommendations relate to 'Provision for Council to Initiate a Special Assessment', and the ability to enter into 'Private Developer Agreements'.

These may perfectly valid proposals, but any discretionary powers in this area can be open to abuse. Developers have their ways of exploiting loopholes, and hopefully these proposals will be looked at very carefully before adoption. 

 

 

 

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