A shake-up of central government funding for roads has the potential to be the biggest challenge the Clutha District Council has ever faced, mayor Bryan Cadogan has warned.
There are fears it could lead to a district-wide rate hike of up to seven per cent.
The New Zealand Transport Agency's ‘Funding Assistance Rates (FAR) Review' will, among other things, determine how much money for roading projects comes from the national fund and how much local councils will have to contribute.
The Clutha District Council's current roading programme costs about $14 million a year, of which $8.5 million comes from the national fund, the rest from the council's coffers.
A discussion document currently out for submission outlined options that could be used to determine how much funding a council receives - taking into account varying factors including the wealth and number of residents in a district, its capital value of rateable land and how many kilometres of local roads it has. State highways are exempt.
About 61 per cent of Clutha's current roading programme is nationally funded. Under the options being discussed, that could potentially fall as low as 49 per cent - a $3.4 millon reduction.
In other words, millions of dollars are at stake and for a council that already spends about half its budget on roading, the stakes are high.
Acting chief executive Alan Dickson said it's a "big deal", although the council did not know the extent yet.
"Just looking at a straight decrease in that rate, yeah that's an immediate impact of what we spend on roads at the moment of quite a bit of money."
The council calculated the potential rates impact of the different options - assuming it stuck to its current $14m roading programme.
Three of the four scenarios left residents facing a rates hike, in the worst case by as much as 7.2 per cent.
Mr Cadogan said without taking any roading changes into account, the district was already facing a 3.9 per cent increase in rates.
"So from my perspective you are looking at a drop in the level of service [for roads] or an untenable rate rise . . . I genuinely believe our communities already have a high rating base to begin with, where in our environment have we got seven or five or even three per cent to add on to what is already happening?"
Previous surveys showed ratepayers were already apprehensive about the roading service, Mr Cadogan said.
Clutha has the third longest network of local roads in the country with almost 3000 kilometres and roughly 16,000 people to pay for it.
District assets manager Jules Witt said any reduction in the funding rate would have a significant dollar impact and council was now looking at whether it was spending money in the right places. "Maybe there are roads we can spend less money on to spend more money on the roads where it's really needed to deliver the best bang for the buck."
Whatever funding rate the NZTA eventually chose, and it could be an option not yet identified, the changes would apply for the 2015-18 period and could be potentially be phased in.
The council was still formulating its submission for this round of consultation which closes on March 3.
- © Fairfax NZ News
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