Wellington City Council forecasting $55m in lost revenue from closed community facilities

Tuesday, 7 April 2020

Wellington ratepayers are set to pick up part of the bill for lost revenue caused by the coronavirus lockdown. (File photo)

Wellington property owners are facing a 4.8 per cent rates hike as the city council looks to offset lost revenue caused by the coronavirus pandemic.

The council is proposing the increase as a compromise between a previously-mooted 9.2 per cent increase and a total rates freeze for the 2020-21 financial year.

A paper which will be presented to councillors on Thursday shows it is expecting to lose $55 million in revenue due to the closure of its community facilities and other fee rebates and freezes put in place during the nationwide lockdown.

The proposed 4.8 per cent average increase would provide some relief for ratepayers while ensuring the council remained financially sustainable, the paper said.

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Wellington came to a virtual standstill on the first day of the nationwide lockdown on March 26.

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* Calls for capital rates to be frozen**

New Zealand's number of confirmed and probable coronavirus cases reached 1106 on Monday.

It would require borrowing about $56m to offset lost revenue from fees and other user charges, and shaving another $12m off the budget by cutting costs elsewhere.

'This provides a pragmatic balance between managing the pressures on current ratepayers and ensuring the council remains financially sustainable into the future, whereby the actions of today do not impact unfairly on ratepayers in the future.'

Although the proposed borrowing did not meet Local Government Act requirements, it could be seen as financially prudent under the circumstances.

It would be paid off over 10 years as revenue increased.

A second option proposing a roughly two per cent increase would risk leaving insufficient funding for future infrastructure, the paper said.

It would require a further $11m of borrowing and was not recommended by council officers.

A third option of freezing rates entirely was also seen as unachievable, with an additional $16m required from borrowing or budget savings, as well as a drop in service levels.

Debt-funding the additional $16m was not deemed financially prudent, and would pass a significant burden onto future ratepayers, the paper said.

The proposals will be discussed by councillors on Thursday, with one or all of the options to be put out for public feedback as the council develops its draft annual plan.

That plan needs to be finalised by June 25.

The paper noted the 2020-21 budget was being developed under unprecedented financial pressure and would need to be flexible.

'This plan has been formed in a short timeframe in a rapidly changing environment, and should be regarded as a guiding framework,' it said.

'It will continue to be subject to more in-depth analysis and change as circumstances become clearer.'