The Dunedin City Council is projected to be about $10.3million better off than it had predicted, setting it up to claw back some of a planned deficit.
Councillors are due to debate spending choices next week that range from potentially boosting a planned increase in funding for Otago Museum to again accelerating Three Waters expenditure.
At this stage, neither is planned.
The council is to start deliberations on its 2023-24 draft annual plan on Monday.
A rates increase of about 6.5% has been signalled.
Budgets were prepared amid concern about inflation, the cost of living and rising interest rates and in February the council projected a net deficit of about $38.5million.
However, revised budgets show operating expenditure is projected to be about $6.6million less than had been signalled and operating revenue almost $3.7million more.
Assuming the rates increase remains about 6.5%, the planned deficit could be pulled back to about $28.2million.
Giving the museum as much as it campaigned for might push the rates increase above 6.6%.
The museum was set to get a rise in its levy of more than $94,000, or 2%, but the museum and its supporters want a 7% increase.
This would have a budget impact of about $236,000.
However, the council might yet choose to run a bigger deficit than $28.2million.
One option councillors are to consider is again accelerating Three Waters spending.
Advancing the capital expenditure programme in Three Waters by $35.2million would take the total capital budget for 2023-24 to $212.5million.
Doing so might reduce the risk of network failure and service interruptions, the council said.
It would also create a higher level of debt ahead of a possible transfer of water activities and debt to a new entity set up by the Government.
The council has already accelerated Three Waters spending, but going further could take the 2023-24 operating deficit above $29million.
The justification for proposing an unbalanced budget has rested mainly on choosing not to fully fund depreciation and much of the rationale for that is related to the perceived increased value of Three Waters assets after a change in valuation method.
Assets considered to be worth more inevitably results in a higher depreciation expense.
A pitch by the Dunedin Theatre Network for $100,000 to help it complete structural assessments on the Playhouse, Athenaeum and Mayfair buildings has been included in the revised council budgets.
The property budget was able to accommodate the request, council staff said.
Councillors might yet choose to take this out.
Council staff also considered it appropriate for a memorandum of understanding to be developed with the theatre network.
