Draft Annual Plan 2024/25
Introduction
The draft Annual Plan 2024/25 is a one-year plan and part of a longer-term planning process. It was scheduled to be the first year of the Long Term Plan 2024-34, however due to uncertainty around Government reforms and direction we are producing an Annual Plan for 2024/25 and a nine-year Long Term Plan will be created next year. This re-scheduling was something offered to, and accepted by, many councils in New Zealand.
The proposal
We are proposing an overall rates increase of 13.8% in 2024/25.
When we first drafted our budget for the 2024/25 financial year it showed an overall rates increase of 19.6%. This was not due to any ambitious projects, but a reflection of the increased costs to our core business. Council has been working hard for the past few months to produce a budget that meets the needs of the district while considering affordability in the face of current cost of living pressures.
What we're seeking feedback on
We do not have control over many of the factors that have contributed to the rates increase, however, we do have control and options on how we manage the impact. We are presenting three options with Option 1 being to accept the challenges up front meaning a larger rates increase in 2024/25 and cost the least in the long run. Options 2 and 3 propose to “smooth” the impact over three years and five years respectively using borrowings (loans) to ensure we continue to provide the services you expect. Options 2 and 3 result in interest costs and cost more in the long run.
Option 1 - Unsmoothed (preferred option)
The Annual Plan 2024/25 is proposing a 13.8% overall rates increase. Draft longer-term budgets are signalling another 13.4% overall increase for 2025/26, followed by 1.7% overall rates increase for 2026/27. This is a total of 28.9% rates increases over the next three years.
This option is preferred because it means we are facing our challenges up front and not putting it off for another day (which costs more in the long run). If we have any future cost increases that put pressure on rates, we are not compounding this problem by being in catch up mode (from putting it off for another day).
Option 2 - Smooth the impact over three years
Council could choose to smooth the rates impact over three years by using borrowings (loans) to pay for expenditure. This comes at a cost. To smooth over a three-year period would mean an 11% overall rates increase for 2024/25, with draft longer-term budgets signalling another 11% overall rates increase for 2025/26, followed by another 11% overall rates increase for 2026/27. This is a total of 33% rates increases over the next three years.
This option means we would need to borrow $1.2 million and this will add $170,000 extra interest costs for that borrowing. That equates to just over an extra 4% of rates over the three-year period.
The risk with this option is that if we have future cost increases that put pressure on rates, we will be compounding these problems by being in catch up mode (from putting it off for another day).
Option 3 - Smooth the impact over five years
Council could choose to smooth the rates impact over five years by using borrowings (loans) to pay for expenditure. This comes at an even higher cost than Option 2. To smooth over a five-year period would mean a 9.5% overall rates increase for 2024/25, with draft longer-term budgets signalling another 9.5% overall rates increase for the next three years and a 6.2% overall rates increase for year five. This is a total of 44% rates increases over the next five years.
This option means we would need to borrow $2.1 million and this will add $402,000 extra interest costs for that borrowing. That equates to an extra 7.4% of rates over the five-year period.
The risk with this option is that if we have future cost increases that put pressure on rates, we will be compounding these problems by being in catch up mode (from putting it off for another day). The longer we put off the rates increases, the more it costs us all.
Consultation document
The consultation document includes further information about the proposal to enable residents to make an informed decision.
Supporting information
You can read the full draft Annual Plan 2024/25 here: Draft Annual Plan 2024/25
Key dates
| Submissions open: | Tuesday 23 April 2024 |
| Submissions close: | 12pm on Friday 24 May 2024 |
| Submission hearings: | Tuesday 11 June 2024 |
| Adoption by Council: | Thursday 27 June 2024 |
| Annual Plan 2024/25 becomes operational | Monday 1 July 2024 |
