Council set to go $27m into the red

LOIS CAIRNS
Last updated 05:00 05/02/2014

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The man charged with overseeing the Christchurch City Council's finances says he will not tolerate rates going up any higher than forecast.

Council finance committee chairman Cr Raf Manji said he was adamant that ratepayers would not have to wear any extra financial burden as a result of a forecast increase in the council's operating deficit.

The council was forecasting an operating deficit in the 2013/14 year of $17.5 million but it is now likely to be $26.9m in the red by the end of this financial year.

That is partly because since the council was stripped of its accreditation to issue building consents in July, it has incurred significant costs that were not anticipated when its budget was approved in June.

For example, it has had to find $8.4m to cover the Crown Manager's review of its building operations and the increased cost of professional indemnity insurance.

Staff have managed to find some savings but they are still predicting the cash operating deficit will be $9.4m over budget.

"If the deficit cannot be found from operating savings or increased revenue in the next six months, options to fund it include increasing rates for 2014/15 by 2.8 per cent over next year's . . . draft planned increase of 6.5 per cent," they said in a performance report prepared for yesterday's finance committee meeting.

Acting corporate services general manager Diane Brandish told the committee almost the entire overspend was due to the work the Crown Manager was doing to address the problems within the building control unit.

Staff were working hard to find savings to compensate for the increased costs.

They had already managed to reduce the projected overspend from $13m at the end of September 2013 to $9.4m at the end of December, 2013.

Manji said staff would have to find more savings or the council would need to get more money out of Christchurch City Holdings Ltd. He was unwilling to see rates increased beyond current forecasts.

Cr Jamie Gough said the performance report made depressing reading.

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- © Fairfax NZ News

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