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Millions of dollars redirected to mitigate impact of rates hike


Hamilton City Council has revised its financial strategy with the aim of alleviating the financial burden on residents (Facebook Image)

Praneeta Mahajan
Hamilton, June 5, 2024

After constant criticism from the residents of the city, Hamilton City Council has revised its financial strategy with the aim of alleviating the financial burden on residents.

The Council is currently debating a revised rates scenario and community funding adjustments at its Long-Term Plan deliberations meeting this week.

Background

The initial draft of the Long-Term Plan, which underwent community consultation in March and April 2024, proposed a steep 19.9% rates increase for 2024/25, followed by annual increases of 15.5% over the next four years.

However, after constant feedback from the community and following directives from Mayor Paula Southgate, Council staff have identified $136 million in deferrals to the capital programme over the first five years of the Plan, aimed at easing these increases.

As a result, the proposed rates hike has been adjusted to 19.2% for 2024/25 and 14.5% for the subsequent four years.

Further options

In addition to these deferrals, Council staff have presented further options to potentially reduce the rates rise even more. These options, which will be discussed in detail at the upcoming meeting, include:

  • Adopting a ‘maintenance only’ approach to transport projects for three years.
  • Cutting $27.5 million from the renewals and compliance budget over the next three years, or $5 million next year alone.
  • Eliminating $10 million earmarked for strategic land acquisition.
  • Postponing nearly $75 million intended for a new wastewater treatment plant.
  • Cancelling the School Link project.

Community in distress

Ms Southgate emphasised the necessity of these measures, stating, “We have heard that people across the community are hurting. There is no magic solution, but we must do everything in our power to reduce the burden on residents without undermining our core services or vital investment in our city.”

Despite the financial adjustments, the revised proposal ensures that the Council will balance its books by 2026/27 and maintain a debt to revenue ratio at least 5% below the limit each year.

Reconsideration of Community Funding

The meeting will also address the potential reinstatement of community funding previously proposed for reduction. The draft budget included cuts to several community services, including:

  • Hamilton and Waikato Tourism.
  • Community services grants.
  • Event sponsorship.
  • Cat desexing contestable funding.

“Times are tough, and we have heard overwhelmingly that community support and wellbeing are more crucial than ever,” Ms Southgate remarked. “It hugely bothers me to take funding away from the community. These groups support those most in need and make our city fun and vibrant. I will be strongly advocating for the reinstatement of existing funding to the community sector, whilst finding savings elsewhere.”

Potential Reductions to Council Services

To achieve the necessary cost savings, Hamilton City Council is also considering reductions in various services. In February, the Council resolved to seek personnel and consultancy savings amounting to $104 million over the next decade. Council staff have identified $12.5 million in annual savings, affecting both community facing and back office functions. Proposed cuts include:

  • Removing the City Safe and road education teams.
  • Closing one suburban library and the Auaha Makerspace, alongside reducing opening hours across other branches.
  • Less frequent maintenance of gardens and road landscapes.
  • Reduced upkeep of public areas, such as litter collection and footpath sweeping.
  • Cuts to city events and community development resources.

An additional $2.5 million in savings from back office functions will be finalised by Chief Executive Lance Vervoort, with guidance from Elected Members. Furthermore, $2 million in high risk internal savings options have also been pinpointed.

These reductions are scheduled to be fully implemented from the third year of the 2024-34 Long-Term Plan, leading to a 0.4% lower rates increase from 2025/26 to 2028/29. Council may opt to introduce these cuts sooner, although this would not affect the rates increase for 2024/25.

The impact on Council staff numbers will be determined by decisions made at the upcoming Long-Term Plan deliberations meeting. This fiscal year, the Council has already reduced headcount by 98 full time equivalents through a series of restructures initiated by Mr Vervoort.

If the proposed reductions averaging $10.5 million per year are approved, it will result in a 15% decrease in Council’s personnel costs.

Community Feedback

While Hamilton City Council prepares to debate its revised financial strategy aimed at mitigating rates increases, members of the public have expressed concerns that the proposed measures are insufficient to address the economic hardships facing residents.

Local resident Ms Thompson voiced her dissatisfaction, saying, “I appreciate that the Council is trying to lower the rates increase, but a 19.2% rise is still too much for many of us to handle. Many families are struggling with the rising cost of living, and any increase in rates will make it even harder. The Council needs to find more substantial savings and consider the real impact on everyday people.”

Similarly, John Adams highlighted the ongoing challenges for small businesses, stating, “These reductions are a step in the right direction, but they do not go far enough. Small businesses are already under immense pressure, and any additional costs could push some over the edge. The Council should be looking at more aggressive cuts in non essential spending to provide greater relief. It is crucial that they take bolder actions to support the local economy during these tough times.”

As Hamilton City Council prepares for its Long-Term Plan deliberations, these public sentiments underscore the demand for more significant measures to ease the financial burden on the community.

Praneeta Mahajan is an Indian Newslink reporter based in Hamilton.

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