City rate rises ‘well over’ 10% suggested

Wednesday, 18 October 2023

Signals are that Hamilton rates rises may need to be significantly more than 10% over the next three years, say senior city councillors.

A senior city councillor warns rate rises of “well over” 10% are being suggested for the next three years amid what’s being described as a short-term financial crisis for Hamilton.

And the chief executive has hinted rates on a middle-of-the-road Hamilton home could go up 18% a year for the next three years.

The city council recently announced that double-digit rises are likely in the first three years of the 2024-34 long term plan (LTP), which is currently under development.

It’s suggested that could help avert the operating deficit blowing out from a projected $17 million this year to $78 million in 2024-25.

Economic development committee chairperson Ewan Wilson said staff had indicated that “well over” 10% rate rises could be needed to increase revenue and help balance the books when it came to operating expenditure.

Economic development committee chairperson Ewan Wilson claims the council has an “addiction” to spending in addition to revenue challenges.

Asked about that prospect, finance and monitoring committee chairperson Maxine van Oosten confirmed “it is suggested at the earliest levels” of formulating the draft LTP.

Wilson said he felt the council had “an addiction to spending in addition to a revenue challenge”, and he planned to suggest ways to reduce spending.

One focus area for him was the council’s Vision Zero programme to eliminate road deaths in the city. Some $10 million a year for 10 years was included in a new draft base budget for 2024-34, he said. It involved the likes of more speed bumps and raised platforms on roads.

“That needs to be slowed down,” said Wilson.

Finance and monitoring committee chairperson Maxine van Oosten says “this is the day of reckoning” for the city and its finances.

He also said growth initiatives needed study. For example, he said existing contracts for the Peacocke development to the city’s south would help provide homes for 10 years worth of demand and he felt no extra funding was needed as the current draft base budget suggested.

Wilson planned to make suggestions for other reductions.

Van Oosten said it could be possible to defer some costs to help reduce next year’s deficit. She described the current situation as “pretty sobering times”.

In recent years borrowing had been used to protect Hamiltonians from significant rates rises but “this is the day of reckoning”, van Oosten said. Rises of 4.9% this year and beyond were “very low”.

“The reality is we’re now on a negative watch from Standard and Poors,” she said, referring to the international rating agency downgrading the council’s long-term credit outlook from “stable” to “negative”.

She agreed there was a need for the council to find more revenue, including from the new government.

It was important the LTP process was honest about the true costs of providing services and that ratepayers gave their feedback. “Here is what we’re proposing… you decide the level of that.”

Asked on Tuesday about the prospect of annual rate rises of well over 10%, chief executive Lance Vervoort responded that average residential rates for the likes of Wellington, Tauranga, Waipā and Waikato district were currently at least $1000 more than Hamilton.

“We need to catch up with other parts of the country if residents expect council to continue delivering what it is now,” he said.

Median residential property rates are currently $2837 in Hamilton. Vervoort indicated double digit increases could add about $10 a week ($520 a year) in 2024-25. That would equate to a rise of about 18% in the first year by Waikato Times’ calculations.