Draft Annual Plan key indicators versus LTP budgets for 2017/18
LTP budget 2017/18
Annual Plan Proposal 2017/18
|Other operating revenue*
|Subsidies and grants received for capital
|Rates increase average after growth**
|Opening balance net debt at 1 July 2017
|Closing balance net debt at 30 June 2018***
|Increase in net debt from 2016/17
|Debt / revenue ratio****
|New capital investment*****
* includes water rates of $19m
** increase is net of a 3% growth factor
*** about 65% of debt is funded through rates. The rest is funded by development contributions and user fees
**** includes capital funding for NZTA renewals and rehabilitation funding as per the LTP
***** excludes vested assets and land sales
The capital programme for next year – which is our budget to deliver new assets like infrastructure (e.g. roads, water and wastewater pipes, treatment plants), and renew or improve existing assets – has increased to $154m, $31m more than budgeted through the LTP.
Most of the additional capital expenditure relates to amended timing and updated costs of projects already in the LTP – some that were planned for later years that we have to deliver sooner to cater for our growth, and others budgeted for previous years that need to be completed.
Other capital expenditure variations are linked to new projects like the proposed Visitor Information Centre and an increase in the size of the airport terminal extension (funded by airport user fees).
Find the detail of variances in capital projects to the LTP in the supporting financial information.
We are maintaining the levels of service identified in the LTP and have revised operational expenditure budgets to reflect updated costs of delivery.
The changes in total revenue and total operating expenditure reflect the increased volume of services we provide to our growing population. This is notable for example in building-related activities, which increase both revenue and expenditure from that budgeted in the LTP. User revenue in airport and marine facilities also increases above LTP levels.
Not all operational expenditure is rates-funded. Expenditure increases in this Annual Plan include the grants to organisations like Bay Oval Trust for floodlighting of the cricket ground, and development of structure plans for new growth areas. These one-off operational expenditure items provide benefits over time to the community so we are funding them through loans like we would a capital asset. This loan-funded operational expenditure, along with the non-funding of some depreciation on local roads in recognition of the NZTA contribution to road replacement, is the reason why the draft budget reports a small operating deficit.
Find the full set of funding impact statements and financial reports in the supporting financial information.
Impact on debt
The changes in timing and cost of infrastructure and new projects mean debt will increase more quickly next year than was projected in the LTP. This is because the upfront expenditure on capital projects is funded from loans which increase our debt levels.
Where possible, the cost and the repayment of debt for growth projects are funded through the collection of development contributions. Interest costs on non-growth funded debt are paid through rates or user fees. About 65% of debt in 2017/18 would be rate funded debt.
The proposed 3.8% rates increase (after growth) would allow us to deliver the planned $154m capital programme in full. In the event we didn’t deliver the full programme of works (e.g. because of delays) we would likely transfer any rates surplus (not spent on paying interest costs) into the Council’s risk reserve. The risk reserve is used to cover unforeseen events or costs to Council, such as leaky home claims and natural disasters. It would help with disaster recovery and community support. It increases the Council’s and the city’s resilience to unforeseen events.
This would bring the total proposed rates collected to $134m, $3m above the LTP budget. However, after taking into account the growth in the number of ratepayers over this time, the average rates to be paid by each ratepayer would be about the same as what was approved in the LTP*.
For details of the rates proposed and the impact on ratepayers see the funding impact statements in the supporting financial information.
*Note: the proposed rates revenue exceeds the total limit on rates of the LTP financial strategy but reflects a similar contribution per ratepayer as included in the LTP. This is because the number of ratepayers is higher than was expected by Year 3 of the LTP. The year-on-year increase (%) may also be above the limit set in the financial strategy, as it is based on a Consumer Price Index estimate of 1.8% to 30 June 2018 – which may be revised downwards.
View more financial information: in the full consultation document (2.2mb pdf) or in the supporting financial information.
Last Reviewed: 20/03/2017