After initially rejecting a plan that would see Tasman’s average rates rise by 9.9%, the district council is now proposing an average increase of… 9.9%.
Affordability and debt concerns last week saw the council’s first draft annual plan unexpectedly fall over, sending staff scrambling to put together a new proposal before the timeline prescribed by law ran out.
An extraordinary meeting of Tasman District Council was held on Thursday afternoon for a second attempt at agreeing to a draft annual plan.
But elected members left having approved a draft rates increase at the exact same level as the initially-rejected proposal, so what actually changed?
Annual plans set the rates increases and outline the work plans for councils’ upcoming financial years, in this case for 2026/27.
Tasman’s first draft, rejected last week, suggested an average rates increase of 9.9% from July 2026 and net debt projections of $328 million by July 2027.
Staff’s revised draft plan shaved half a percent off that increase, bringing it to 9.4%, by deferring new infrastructure projects, including for three waters, and reducing spending on day-to-day council operations.
However, only some of those savings have been specifically quantified, with a portion of the cost savings coming from unspecified targets that council managers will need to find.
“Council has had several years of cost-cutting and runs lean relative to most of the local government sector. As a result, this target will be challenging to meet and management do not consider further unspecified cuts prudent,” read the staff report on the proposal.
But if half a percent was taken off, why is the proposed average rates increase still 9.9%?
Council staff proposed keeping roading depreciation at the level as in the initial proposal, at 18%.
This means that 18% of the cost of renewing old roads would be funded by rates.
The remaining 82% was split between the New Zealand Transport Agency (fixed at 51%) and council loans (31%), which impacted the council’s debt.
The council has a plan to progressively fund more of its entire 49% share of roading depreciation through rates each year to limit the ongoing impact on debt levels
However, in the face of a high rates increase, the council initially opted to put the handbrake on how quickly it moved to fully rate-fund road depreciation, opting for 18% next financial year, rather than the 24% that had been planned.
On Thursday, Mayor Tim King instead proposed easing that handbrake slightly so 21% of road renewals were funded by rates.
Combined with the already-suggested deferrals for some new infrastructure, that suggestion meant that the forecast net council debt by July 2027 would be $320m, down from $328m in the initially-rejected draft, albeit at the cost of bringing the rates back up to 9.9%.
“If I reflect on the conversation we had a week ago, there was a similar amount of anxiety or concern about the net debt figure as there was about the rates figure,” Tim said.
Those changes from staff and the mayor managed to secure a majority support from elected members.
Tim, deputy mayor Brent Maru, and councillors Celia Butler, Jo Ellis, Kerryn Ferneyhough, John Gully, Mike Kininmonth, Kit Maling, Timo Neubauer, and Trindi Walker supported taking the proposal out for consultation.
Councillors Mark Greening, Mark Hume, Paul Morgan, and Dean McNamara voted against the draft.
Councillor Dave Woods was not present.
Elected members were warned that if an annual plan was unable to be adopted by 1 July, the council risked financial and reputational costs, as well as potential Ministerial intervention.
But Greening said that 9.9% was “really high for a lot of people”.
A long-time critic of council debt and spending levels, he wanted the council to take on more debt to offset the rates increase.
That would ease the pressure on ratepayers, he said, ahead of making significant spending cuts during next year’s long-term plan process, which allows for greater levels of change than an annual plan process, to achieve a large reduction in future levels of debt.
The council’s long-term plan forecast net debt to reach almost $460 million in 2033/34.
However, Tim said that councils had a vast number of responsibilities and operated within a highly dynamic and challenging environment.
“They don’t neatly fit into a tidy financial package… there are no easy options, and they all have consequences for different parts of our community.”
He had taken on board staff advice that they would continue to search for savings and efficiencies where possible.
Consultation on the draft annual plan is expected to begin in early April.
