Christchurch City Council staff are recommending councillors vote for a ‘revised budget’ – overall rate increase of 3.5 percent, down from the earlier proposed 4.65 percent.

This despite comments made on April 6th by Christchurch Mayor Lianne Dalziel.

Last month, Ms Dalziel said “we are determined to get to zero rate increase.” You think you can do it? Asked Lynch in a radio interview – “yes absolutely.” Ms Dalziel says “the organisation has been working behind the scenes in order to achieve this.”

“It’s going to be hard yards, and every single councillor is going to have to work very hard to work on how we get there.”

Today’s news isn’t going down well with ratepayers who have expressed outrage at the new proposal.

The new proposal was announced on the same day The Reserve Bank released its latest Financial Stability report.

It says some households and firms will face a significant loss of income. Firms in the tourism, accommodation and hospitality sectors are particularly affected, and will face longer recoveries as border restrictions and social distancing measures affect sales and operating models.

The report says household incomes will come under pressure as staff cutbacks and firm failures lead to rising unemployment.

For some households, particularly those that have high debt relative to their incomes, this is likely to lead to difficulty in servicing their mortgages.

House prices are likely to fall, although strong equity buffers as a result of loan-to-value ratio restrictions will limit the number of borrowers who face negative equity.

The council now says for an average house with a value of $508,608 that would mean paying an extra $1.19 a week, or $62.05 a year.

Read the report for the budget meeting.

The Draft 2020-21 Annual Plan that the Council was in the process of consulting on when the country went into lockdown provided for a 4.65 per cent rate increase.

Council Chief Executive Dawn Baxendale says the organisation recognised that we had to reduce the average rate increase of 4.65 percent proposed in the initial draft plan given the gravity of the situation that the organisation and our ratepayers are facing.

“The revised plan we will be recommending to Council reflects the very different financial position and social and economic environment we are now in as a result of the Covid-19 pandemic.’’

The recommended budget caps capital spending at $400 million, reduces the organisation’s running costs by $23 million, and increases the borrowing by $102 million.

It also sets aside $118 million for the Metro Sports Facility and Multi-Use Arena.

Mrs Baxendale says “from the outset, we were clear that we did not want to make significant changes to the levels of service set in the 2018-19 Long Term Plan, which could not have been changed without triggering a lengthy consultation process.’’

“We scrutinised everything to identify the $23 million in savings across the organisation, came up with 264 potential savings, and ranked these based on their impact to our residents and the city’s recovery, not triggering a Long Term Plan process,  and ease of implementation.”

“It was advantageous to be able to factor in the findings of our Annual Residents Survey released last Friday, which show that people expect a certain standard of service from the Council and that we need to continue to invest in core infrastructure such as roads and water.’’

“The operational savings put forward in the recommended budget option have been achieved through finding efficiencies across the organisation and implementing new measures such as a recruitment and proposed wage freeze, reduced use of consultants and contractors, and savings to staff travel and training along with printing and marketing.”

The Council will consider the budget recommendations at an Extraordinary Council meeting on Friday at 9.30am.  The meeting will be live-streamed so people can follow the decision-making.

Once a revised Draft 2020-21 Annual Plan has been adopted, a new round of public consultation will be undertaken, starting on 12 June.

The Council is not due to finalise the budget until the end of July.