Your Questions Answered - With Kaipara Commissioner John Robertson: Common rates myths explained

In the last edition, I answered questions on behalf of the commissioners around the proposed Local Bill, a Bill designed to validate a number of rating errors made by past councils. I made it clear that this Bill does not remove accountability, or liability, should the Auditor-General or any regulatory authority find that individuals or corporations should be brought to account.  

I also noted that the commissioners had reviewed and then proposed changes to the ten year plan for council that had been set by elected members in August 2012. This plan and its proposed amendments are available for your study and submission.

We recommend this plan to you. It sets the council up with a sustainable financial plan, forecasting out to 2022. Ratepayers have asked a number of questions, around debt and rate levels as follows:

 

We have been told that the council has debt levels that are unsustainable. Is this correct?

No, council debt is manageable. Council debt is high at $80 million, but it is not the highest debt per rateable property in NZ. Our proposals include paying down this debt to $50 million by 2022. 

 

Are you proposing to increase rates above earlier forecasted levels, to pay down this debt?

No. We have cut costs out of the budget set by elected members in 2012, and applied these savings to pay down debt faster. 

 

I have heard that average general rate increases will be 200 percent. Is this correct?

No, that is totally wrong. The average rate increase proposed across the district this year is 9.3 percent. In the years following this, rates will increase at inflation-type levels – 2 percent to 3 percent annually. So, we need to ask ratepayers to take one more year of an increase above inflation to get council’s books in order, but then we will be able to run as a council should.  

This is a substantial turnaround from what used to happen, when Council used debt to fund a significant portion of its operating costs.
 

What are the proposed increases in Mangawhai?

These vary between properties, but on average they are below the district-wide average of 9.3 percent. If you are connected to, or connectable to the Mangawhai Wastewater Scheme and have not previously paid an initial capital contribution to the scheme, your rates bill will have an additional impact from this contribution.   

 

What about the Mangawhai Endowment Fund – does it still exist?

The Mangawhai Endowment Fund exists as a reserve in the council’s books – at a value (30 June 2012) of $5.726 million, which includes $1.38 million in land holdings. A previous council decided to borrow from this fund to help finance other council activities, and so it does not exist in the sense that there is a pool of cash sitting in a bank account. Council does, however, have access to sufficient cash in the form of debt facilities to pay out any portion of the Endowment Fund that might need to be used to finance a specific project or grant.

 

Does the Endowment Fund earn income?

Yes, the fund does earn income from rents on its properties and from interest that the council pays to it. It then grants out this income annually to Mangawhai community projects, after keeping back a portion to “inflation proof” the fund. Recently the Fund Committee approved grants of $55,000.

 

Commissioners and council staff continue their engagement in the community, supporting community groups and ensuring that services are delivered effectively.   Thank you for your support. If you have any questions you think should be considered for this column please email them to me.

 

jrobertson@kaipara.govt.nz