Councils 'ripping off region's ratepayers'
Waikato ratepayers are being ripped off by their councils rating them millions for work they then fail to complete, claim two former local body politicians.
Hamilton City Council has $40 million of "carryovers" on its books from the last year, which the critics argued was due to an over-ambitious work programme, needlessly high rating, and poor execution of the annual plan by managers.
Former Hamilton mayor David Braithwaite and city finance chairman Garry Mallett said carryovers unnecessarily took money out of ratepayers' pockets.
But the city's chief financial officer, Richard Briggs, said the carryovers were in most cases beyond councils' control - due either to dealings with third parties or contractual obligations which put the council at the mercy of contractors.
Carryovers represent expenditure for work signed off by local councils, and rated for, but not completed as expected by the end of that financial year.
Mr Briggs said in some cases planned expenditure was delayed by contractors not completing their other work commitments as expected, and in other instances, such as land purchases, were the result of protracted negotiations.
The carryovers were approved and the work rolled over.
A $5.9m surplus padded by carryovers posted by Waikato Regional Council in its annual report would limit future rates hikes, chairman Peter Buckley said.
However, the two prominent former local government politicians, both trained accountants, said the results meant council rates were needlessly high.
Announcing the regional surplus, Mr Buckley said the council's strong financial result showed it was performing and giving ratepayers value for money.
"While these results reflect a wide variety of factors, including some spending not going ahead as planned last year, the council's ongoing tight focus on cost control has also played a key part in producing this result,” he said.
“Extra surpluses can play a part in containing future rate rises.”
But former city council finance chairman Garry Mallett said that argument amounted to the regional council saying that "because we've ripped you off this year we don't need to rip you off quite so much next year".
"It's a scandal," he said.
Carryovers happened only because councils' governance wings didn't hold management to account for completing all the work they'd rated for, Mr Mallett said.
The regional council has reported an operating surplus of $5.9 million for the 2011-12 financial year, but after transfers to reserves and carryovers of $635,000 for work not finished last year the council has $1.17 million of unallocated operating funds it has not yet decided how to spend.
Carryovers and unallocated funds made up more than $1.8m of the surplus.
Former Hamilton councillor and mayor Mr Braithwaite said the surplus meant the council had effectively over-rated the region's ratepayers.
He said carryovers and unspent funds were the result of proposed projects rated for when they were just an idea, then had not happened.
It was appropriate the regional council put the money towards income for the following year, but it had gained free use of ratepayer's money, he said.