Rates may rise nearly 4 percent

NICHOLAS BOYACK - HUTT NEWS

Hutt property owners face a potential rates increase of 3.9%.

Councillors last week received a briefing on the council's current financial position and projected budget. A rates increase of 3.9% would result in a net debt level of $57.6 million at June 2011 and $17 million at June 2015. Both figures are well within current council strategy and would represent good news for Mayor David Ogden, who campaigned on keeping rates down and getting debt under control.

The rates increase for 2008/09 was 5.2%.

The latest budget includes some "significant" changes to the forecast budget.

* A likely increase to the costs of developing Korohiwa.

* Employee costs are set to rise beyond the budgeted figure of $25 million.

* A 12-15% increase in the cost of energy (currently $2.9m per annum).

* The cost of adding three indoor courts to the Walter Nash Stadium has been estimated at $6 million. The council has budgeted $1.7 million, with the rest raised from other sources. Mr Reid warned, however, that the hoped for "level of third part party funding is extremely optimistic."

* Expenditure of $23 million to upgrade the main sewer pipeline has been deferred from 2014 to 2018/19.

* Expenditure on parks and gardens could increase by $6 million after 2011.

Mr Reid warned councillors that the council faces some risks. The New Zealand economy is in recession and increased unemployment could reduce the amount council collects through 'user pays', with a potential jump in the number of rates debtors.

Mr Reid strongly recommended that the council should not increase parking, resource consent and building fees.

Projected debt figures are based in the assumption that the council will be able to sell assets totalling $30 million. He notes that the current property market is in "decline" and recent asset sales have been minimal.

The recession is also likely to lead to "extremely low" inflation in 2009.

Current council policy is to set rates increases at no more than 0.5 per cent above the rate of inflation and he said that could be hard to achieve if inflation is very low.

A council meeting has been set down for 12 and 13 February to set a preliminary budget.