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Saturday
May072011

TCDC Gets Budget Red Light

Local Government analyst Larry Mitchell has given a red-light to TCDC, along with Hamilton City, Waitomo and Ruapehu district councils in an article published in yesterday's Waikato Times. This follows an analysis of the results of all 73 councils to 30 June 2010 (including the then seven separate Auckland councils).

His analysis was assessed on local community affordability and financial sustainability based on information contained in accounts to 30 June. But high levels of borrowing appear to trigger his placing of councils in the lowest category, as with TCDC.

This is a timely reminder to our inexperienced councillors who appear to have fallen for the assurances provided by Tauranga accountant Phillip Jones who was appointed to the Audit committee at the instigation of Mayor Glenn Leach, and who at the 15 April Finance and Revenue meeting informed councillors that our Council was "under-borrowed". He assured councillors that they could well afford the proposal to lift the borrowing limit from 150% of revenue based on both internal and external borrowing, to external alone - effectively a net increase of around $55m.

This was of course music to the ears of the likes of Councillor McLean who had long advocated for such an increase to enable all councillors 'feel-good' projects to proceed before the next election, with the subsequent effects of increased interest and depreciation flowing through to rates later. The other councillors appear to have taken the bait and over the next two weeks will deliberate on the draft Annual Plan that will incorporate the first steps towards this risky conclusion. This will be followed by the LTCCP deliberations that will set the plans in concrete. 

Mr Mitchell correctly pointed out that Hamilton's $7,000 debt per ratepayer was "almost double the average debt" (throughout all councils). At that rate, TCDC debt at around $7,500 per ratepayer, before adding the proposed $55m. increase - close to $10,000 per ratepayer, begins to look very imprudent indeed.

It is to be hoped that some of the submitters who front meetings over the next week see fit to draw attention to this anomalous situation, and mange to persuade councillors to pull back from the financial abyss that they seem determined to explore in order to artificially restrain rate increases. Not that Mr Mitchell was suggesting further rate increases - he firmly rejects this in favour of restricting expenditure, and reducing debt. One can imagine his reaction to our Council's new borrowing proposals. 

Hamilton's Mayor Julie Hardaker indicated that she was well aware of her Council's financial woes, and that they were determined to deal with them in the LTCCP process.

 

 

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