The council yesterday adopted its annual plan for 2023-24 and councillors described it as a prudent investment in inflationary times, but warned tough decisions loomed next year.
The budget they accepted was unbalanced, as it had a deficit of $28.6million, arising from uncertainty about the Government’s Three Waters programme and a decision by the council not to fully fund depreciation on its assets.
Council debt is forecast to increase from about $455million to $589million in the 2023-24 year and council chief executive Sandy Graham would have room to take it to $600million.
However, a chunk of debt will be taken off the its books at some stage if the Labour Party holds on to power in October’s general election and it follows through on Three Waters reform that would shift water activities away from councils.
It has been estimated about $240million of debt might transfer off the council’s balance sheet in June next year.
Dunedin Mayor Jules Radich said the council could move ahead confidently with its programme.
A budget of about $212.5million was approved for capital expenditure in 2023-24, including $95million for Three Waters work.
Cr Steve Walker said accelerated spending on Three Waters would reduce the risk of network failure.
He listed a series of projects and services that had benefited from council funding, ranging from the revamp of George St to museums.
Cr Walker expected interest costs would continue to present challenges and said the council might need to make unpopular decisions next year when it considered the 2024-34 long-term plan.
Deputy mayor Sophie Barker said the annual plan was prepared amid a cost-of-living crisis and this had been kept in mind.
Inflation has been running at about 6.7%.
Cr Andrew Whiley described the council’s plan as an ‘‘investment spend’’, setting up the city for growth.
Cr Christine Garey said residents were getting value for money and she commended the council for its courage in approving significant water infrastructure improvements.
The impact of the rates increase will vary between properties, especially after rating revaluations that came through this year.
