"If you pull it off really slowly, it makes it even more painful," Cr Jim O’Malley said as councillors started turning their minds to the next nine years of spending.
The Dunedin City Council is about to embark on an intensive process to develop the draft 2025-34 long-term plan and getting back into surplus has been identified as a looming challenge.
At yesterday’s finance and council-controlled organisations committee meeting, councillors mainly discussed preliminary figures from the recently completed 2023-24 year.
This included a deficit of almost $28.8m, which was close to budget.
Both revenue and expenditure were higher than forecast, leading to a net deficit $175,000 above budget.
Cr O’Malley said the deficit was mostly unfunded operating costs in Three Waters, "which I’m encouraging us to get on to and face quickly".
The council has at least one more deficit to get past first.
It chose not to fully fund depreciation in the 2024-25 year, projecting a $28.5m deficit at the same time as approving a 17.5% rates rise.
Total debt increased from about $460m in 2022-23 to $595m at the end of June this year.
Debt is forecast to rise to $709.5m by July next year.
Dunedin Mayor Jules Radich acknowledged planning would be difficult from here.
"There can be no doubt our nine-year plan will be difficult," he said.
"We have got a large increase in debt again and we’re still running a deficit."
Financial services manager Hayden McAuliffe said there was no distribution from the Waipori Fund in the past year because its capital growth objective was not achieved.
Capital expenditure was $206m, or 96.9% of the full-year budget for $212.5m.
An accelerated programme for the revamp of George St meant more work was delivered on the city centre upgrade than had been budgeted in the past financial year.
However, there was an $8m capital underspend on the Shaping Future Dunedin Transport package, including to deliver a park-and-ride facility at Mosgiel.
Last year’s deficit coincided with a 7% pay rise for staff.
A $1.8m overspend on personnel costs ended up happening, pushing the actual spend for this just above $83m.
This was partly mitigated through management of vacancies.
Deputy mayor Cherry Lucas said deficits would need to be dealt with sooner, rather than later, and councillors would have to look closely at the finances each month.
Cr Sophie Barker said more transparency was required for capital budgets and the council would have to pay more attention to operating budgets.
Cr Christine Garey said central government had imposed costs on local government.
"This idea that we’re barging ahead with nice-to-have projects, as opposed to need-to-have, I don’t accept."
The June 30 result presented to councillors is subject to final adjustments and external audit.
On-street and off-street parking revenue was down about $1.1m because occupancy was lower than expected due to the George St upgrade and other works around the city.
Council chief financial officer Carolyn Allan said a reduced amount was budgeted to come in from on-street parking in the new financial year.
Asked by Cr Kevin Gilbert about parking enforcement, corporate services general manager Rob West said the council was looking at options for mitigating reduced parking revenue.
Numbers game
Figures from the 2023-24 year.—
- Deficit of almost $28 million, about $175,000 above budget.
- Capital expenditure of $206m, about $6.5m below budget.
- Accelerated transport capital spend of $16m for central city upgrade.
- Capital underspend of $8m on Shaping Future Dunedin Transport.
- Total debt of $595m, about $6m above budget.
- Personnel costs $1.8m above budget after 7% pay rise.
- Parking revenue $1.1m below budget.
