Cuts to services foreshadowed by council

Tuesday, 12 December 2023

Alarm bells continue to ring for the Wellington City Council’s financial position, with a series of further cuts suggested by staff.

At a marathon meeting last month councillors voted to save money through dozens of changes – by demolishing the City to Sea bridge, scrapping a plan to decarbonise the city’s pool heating and postponing upgrades to community assets like the Begonia House in the Botanic Gardens.

It wasn’t enough. Staff came back and told them the estimated rates rise for the city based on that thinned-out range of projects was a whopping 26%.

Council staff had managed to find a further $18m of savings, bringing the rates increase down to 21.7%, but warned these carried risks and would be “stretching the capability and capacity of the organisation”.

The latest financial information, revealed at a councillor briefing session on Tuesday, shows that serious cuts are needed to bring next year’s rates increase down to a 13.8% – plus an added 2% levy to fund the new sludge minimisation facility.

Councillor Rebecca Matthews, who leads the council’s long-term planning committee, said there were some serious choices ahead for the council.

It would be possible to bring the rates bill down further but that would require cuts to services that residents know and love – like libraries and pools.

In February, councillors will decide the levels of service provided by the council and whether cuts can be made.

Staff recommended cuts worth about $7m, but there is flexibility, depending on how councillors decide the rates bill should look.

Matthews said the council should be able to avoid changes that affected a lot of residents.

“We have choices. People can make decisions which alter that rates bill, but it depends on the appetite of councillors and the public for deeper cuts … None of it is easy.”

Going further than what staff had recommended in the briefing would start to cut services which would affect residents’ experience of the city. That was where the decision-making would get difficult, Matthews said.

Many of the recommendations to reduce the rates bill, including methods like not fully funding depreciation, will create a deficit. The council would have to make up the costs in future years.

Staff had previously identified “levers” the council could pull to change the rates bill. There were no new levers left, staff warned councillors, meaning any further decrease in the rates bill would involve “the ability to pull harder on the existing ones”.

To bring the rates increase down to 13.8%, council staff recommended five further actions.

The council could save $5m of operating costs through changes within the organisation; fees for council services would be increased, for $5m of additional revenue; the sale of surplus assets would be used to offset the rates bill for a further $8m; the council would defer full funding of depreciation for new assets like Tākina for $10m; and decreasing the level of service by $7m.

Mayor Tory Whanau said staff had worked “around the clock” to strike a balance between delivering for the city while avoiding rates increases.

Other councils in the region have signalled even more dramatic rates increases are likely – 16.5% in Lower Hutt and 20% in Upper Hutt.