|Straight from city council
A personal view,
by Councillor Steve Morris
Councils usually adopt their budgets to determine next year’s rates by June 30. However, this year, several councils are looking at finalising their budgets by the end of July or even later to more accurately forecast the effects of COVID-19 on their operations.
Public submissions on TCC’s proposed budget closed last week; however, it’s likely we’ll need to reopen submissions because that budget, requesting a 12.6 per cent increase in rates (later reduced to 7.6 per cent), was drafted prior to the lockdown. Some councillors forewarned the threat of COVID-19 on our economy at the time; unfortunately, their argument did not win the day. A number of submissions have since requested a 0 per cent rates increase and I’ll certainly keep an open mind on the issue.
As I mentioned last week, the ‘worst case’ modelling of TCC revenue shows a reduction of $70m for the year which reduces our capacity to borrow for next year’s infrastructure down from $250m to as low as $10m. On the plus side, Government is looking to fund some council projects across the country, but indications suggest it won’t be anywhere near enough to fund the national infrastructure deficit. Another positive is that the Local Government Funding Agency (backed by the crown) is looking to lend 20 per cent more in low interest loans to councils with a credit rating of ‘A’ and above. In Tauranga’s case this would give us another $70m of headroom.
We can borrow to prop up the economy during a recession but it’s the private sector that generates wealth to pay taxes, rates, and ultimately repay loans.