A $4 million hole in its roading budget means the Dunedin City Council will be unable to do all the work it had planned to do on the city's roads in the next three years.
The shortfall comes after confirmation last week of lower subsidies than hoped for from the New Zealand Transport Agency (NZTA) over the next three years, together with a June decision by the council to reduce its contribution to the roading budget to reflect the anticipated subsidy levels.
Council staff are now working on where cuts will be made.
Council transportation operations programme engineer Michael Harrison said the projects already included in the council's long-term plan would still go ahead and the feeling was people would not generally notice that other work had been postponed, but the situation was not ideal for the long-term life of the city's roading assets.
"Roads will probably get a bit rougher."
The council asked the NZTA for $39 million over the next three years to subsidise the maintenance and renewal of roads around Dunedin.
It was allocated $37 million in the NZTA's national land transport programme for 2012-15 - 6% less than requested.
The NZTA subsidies make up about 56% of the council's total roading budget.
The council also voted during the long-term planning process to cut its contribution to the roading budget by $420,000 a year for the next three years, to reflect the expected reduction in subsidies.
Mr Harrison said the NZTA subsidies were about 3.5% more than the amount received in the 2009-12 programme but did not cover the increase in the costs of roading work, including increases in fuel, bitumen and maintenance costs as well as wages.
Decisions about what work and services would have to be cut to manage the gap would now have to be made in consultation with community boards and the council.
"We are reviewing our procurement and attempting to lower the costs of delivering our budget. It is a battle and ultimately there is going to be work not done.
"Over the next three years, most people won't notice what isn't done. It has more of an impact on the long-term life of the asset. We'll probably have to do things like put more priority into the high-usage roads, rather than the low-usage roads."
However, the lower subsidies were anticipated and the council was "actually quite pleased" with how much it ended up being allocated, given the financial constraints across the board.
"It could have been a lot worse."
Mr Harrison said the council's budget for minor roading improvements was also affected by lower subsidies - receiving $1.2 million, where $1.4 million had been requested.
That meant some projects in that budget would simply be delayed until more funding became available.
Councillors are to be briefed tomorrow on the subsidies.
