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Ratepayers in Ashburton may face a 10 per cent rates hike before Government imposes its 4 per cent rates cap, but the mayor denies they are cashing in.
Ashburton Mayor Liz McMillan says council is looking at a sliding scale of rates caps in its long-term plan, which sets out its budget and priorities for 2027-37.
Councillors indicated a self-imposed 10 per cent rates cap, excluding water charges, for 2027/28.
“It’s a limit and definitely not the starting point, or target,” McMillan said.
“We were only setting the direction to prepare the long-term plan and put those cap numbers on to work out the budgets.”
The Government plans to cap rates increases at four per cent from 2029, which excludes water charges, but long-term plans prepared before then will need to consider the target range of two-four per cent.
Ashburton is modelling a 10-7-4 per cent cap range over the first three years of its long-term plan.
McMillan said the council wasn't trying to cash in before the four per cent cap is introduced.
“If that was the case, we'd put it up to 20 per cent.”
The sliding scale is the council looking “to get everything in order” in a transition to a future under a Government-imposed four per cent cap.
She said that aside from funding the new road for Ashburton's second bridge, it will be business as usual in the first three years of the LTP.
A long-term plan workshop last week included discussion on rates caps and how Christchurch City Council is implementing a three-year cap transition of 8-6-4 per cent, and Ashburton wanted to look at a similar model, McMillan said.
At the workshop, Ashburton council chief executive Hamish Riach said councils can't ignore the rates cap, “but it doesn't say you have to comply with it (beforehand)”.
Community and open spaces general manager Toni Durham said usually, a long-term plan proposes a timeline for big projects, but this time there needs to be conversation with the community around trade-offs.
The only major project to reconsider in the 10-year plan is a three-court extension at EA Networks Stadium, an estimated $23.7 million project, currently scheduled to start in 2031, year four of the new LTP.
Councillor Russell Ellis said there was uncertainty around some costs, such as regional spatial plans and RMA changes.
“We might be doing a budget in reverse almost. The things that have to be in there and then where that lands us, we have to start cutting and slashing on some of those things that we're not regulated to do.”
Riach added the council is obliged to fund some things, like new second bridge road, “while we balance everything else.”
He said officials have advised Local Government Minister Simon Watts of an expectation that fees and charges will rise and service levels will drop under rates capping.
Debt limits
McMillan said the council is also proposing raising its debt limit from 250 to 280 per cent the pre-covid level.
The council is sitting around a debt level of 160 per cent of its revenue, which will go up to 190 per cent due to the second bridge road project loan, McMillan said.
The extra headroom will act “as a resilience fund, in case we have some form of major civil defence emergency or something like that”.
“We haven't been near the 250 per cent limit and don’t plan to be, unless we have a worst-case scenario and it’s there if we need it.”
