In just nine years; Savings accounts spent, Debt increased, and now 14 unbudgeted items
Is past performance the best predictor of future behavior?
In just nine years, your elected council has squandered large amounts from Councils savings accounts (these are called reserve funds) which had been built up over many decades and were used as internal funding options for capital asset renewals and protected rate payers form fluctuating commercial interest rates and external debt, These funds are no longer available and consequently future councils will need external loans to pay for capital projects that will be paid off by future generations at higher interest rates.
Increasing external debt, within the balanced budget constraints, of the Local Government Act, will mean higher debt servicing costs and this will impact on available funds for operational budgets. In turn this will force future councils to review and reduce levels of service and increase user pays, while external lenders receive a greater share of councils rates income. Every three years Council reviews it's Long-Term-Plan. The latest review was publicly consulted just last year. Knowing this was due and knowing that there were a number of significant cost implications from works in progress but not reported, a prudent civic leader (mayor) would have asked management to accelerate reporting to ensure council could be better informed when determining the budgets and activities programmed the next ten years. Instead after approving the ten year plan council went on to approve fourteen (14) additional items that are effectively unbudgeted. When I recently asked Management what the costs of these items were likely to be, they were unable to provide an answer because in many cases business cases and budgets had not been developed, but council has approved these anyway!
In light of the problem Napier City Council now has to balance its budget over the ten years of the Long-Term-Plan and with central government reforms pending for local government, your new council need to consolidate our core services and truly understand the sustainable costs of delivering those services, then review our tourism operations and develop a model that will see their operational costs self-sustaining (i.e. not a cost on the ratepayer) then
What are the unbudgeted items, how much will they cost if you don't have a Mayor who will control rates increases?
Below is an extract: from the Prosperous Napier Committee - 09 June 2022 - Open Agenda, Item 3
a. Note the following projects of Council are currently not fully funded in the Long Term Plan 2021-31 with pre-work and scoping currently underway:
New Aquatic Facility
Civic Building – it is unlikely the current funding can service both a new library (including Council Chambers) as well as Civic accommodation for Council officers
Significant upgrade/new National Aquarium – recommendation to further discussions with Central Government on funding
Housing - long term plan amendment proposed for consultation to include rates funding gap, based on community feedback to continue with social housing
Inner Harbour – the Ahuriri Masterplan is currently not fully funded
Three Waters Transition – there are a number of work streams that have been set up that require Councils input and contribution. There may be some potential funding from Central Government to support this initiative, but will require Council approval to access this.
Resource Management Act Reform – there is transitional funding required to support this both internally, regionally and nationally. No funded has currently been provided
Regional Spatial Plan – currently no funding for this national initiative
HB Museum Storage – budgets yet to be finalised
Climate Change funding – noting the national requirements moving forward
i-Site building requirements – noting that this may form part of the new Library location
City Vision Initiatives – funding was removed from the 2021-31 Long Term Plan, with requests coming from developers to support changes within the CBD for their projects
Inflation above Long Term Plan projections provided by BERL for the assumption development
Long Term Plan Amendment funding – audit and engagement ($150k)
Your current council has not discussed the consequences of these unbudgeted items or haw they will balance the budget going forward, basically leaving it to the next Council to sort out. Is that responsible civic leadership?
So, is past performance the best predictor of future behavior?
Having not fully reviewed Councils budgets at the last opportunity, the Long-term-Plan 2021-2031 and having since added 14 unbudgeted items, your current mayor has indicated a full review of all budget lines will occur in the next term, will she do this?
- There's still chlorine in your drinking and bathing water - in 2019 she promised to remove chlorine
- There's still no War Memorial on Marine Parade - in 2019 she promised to reinstate the War Memorial
- She promised greater transparency