It was previously forecasted in March the city council would incur a deficit of $5.2 million from the pandemic, but April projections are now predicting a deficit of $33.2 million this financial year.
The key factors behind this are the final dividend of $26.3 million from the city council's investment arm Christchurch City Holdings Ltd no longer being expected to be received and a reduction of $9.4 million in revenue due to facilities being closed and lower parking and fine revenues. This deficit was however offset by reduced costs, bringing it to $33.2 million.
The dividend returned to the city council will be key to the deficit, confirmation around how much will be returned if any at all is expected to come towards the end of this month.
City council chief executive Dawn Baxendale, who has taken a 10 per cent pay cut to her $495,000 salary in response to the Covid-19 crisis, said the impact of the pandemic on the city council had so far been significant, leaving it in a difficult financial position.
She said her and her team would be providing scenarios to councillors around what the council could look like from zero rates rises to the "other end of the spectrum" to give them perspective before they are tasked with signing off this year's Annual Plan.
The Annual Plan will dictate how much residents and businesses are charged in rates over the next financial year and is likely to be a hotly debated topic with some city councillors pushing for zero rates increases and others calling for a business as usual approach.
Mrs Baxendale described these scenarios as "levers" and said they would be broken down into four areas.
These areas cover cost efficiencies, context around borrowing, how the capital programme would be impacted and what savings would be available.
She said the council had no desire to make "significant changes to significant levels of service" as it would trigger a Long Term Plan process which would "put significant strain on the authority."
"I am feeling very positive and optimistic about the future for our city and the leadership role that it will take not just within the region, but I think we have a lot to offer with our prior experience with the earthquakes and what went well and what didn't go so well, we have got a lot to offer the rest of the country as well," she said.
Mrs Baxendale said the city council’s executive leadership team was working to identify savings right across the organisation.
City council chief financial officer Carol Bellette said it had "sufficient financial flexibility" in borrowing capacity, owing $1.91 billion in gross debt.
City council staff are also reprioritising the capital programme and investigating options for increasing borrowing to ease the immediate financial pressure on the organisation.
Said Mrs Baxendale: “As I have said previously, there are no ‘no-go’ areas for scrutiny as we look for savings. Our challenge is to make sure that we are offering the right services to residents while continuing to support our city and economy to recover from the Covid-19 pandemic.’’
