Looking after what we’ve got: Continuing with our maintenance and renewals programmes to ensure our assets remain in average to good condition.

Delivering the same services, to largely the same standard: In the current economic environment we don’t want to spend more money on extending Council services – so we’re focussing on maintaining our existing assets and delivering our existing services, largely to the same standard. There are some exceptions (like where regulations now require a higher standard, or where reducing our costs might impact service over time).

Smoothing out costs where we can: There are a range of different ways that we can fund/budget for projects, and these will each impact rates differently. Where it makes sense and is still financially responsible, we’ll be smoothing those costs out over time. An example is the biosolids (sludge) that have accumulated at the Morrinsville and Te Aroha wastewater treatment plants. This material presents an environmental risk and we have known for some time that it must be addressed. It’s expensive to remove (we estimate $8.5 million), but once gone will give us increased capacity in our ponds for a very long time. For that reason our draft budgets plan for getting the work done over the next five years, but spreading the cost to ratepayers over 15 years.

Changing how we manage our roading budget: If the costs continue to increase at the current rate, it would cost us about $8.5 million to do the road renewals that we currently do for $7 million. While we could increase the budget (i.e. the work needs doing), we are unsure whether Waka Kotahi/NZ Transport Agency would match the funding – so there is a risk that the entire cost could fall on ratepayers. Our external reports also show that our roads are maintained to a good condition. So we’re  reducing part of our road renewal programme to minimise the cost increase. The community won’t see a noticeable difference straight away, and we’re aiming to prioritise the renewals to try and keep our roads to the same standard (above the minimum standard) – but this may impact the quality of our roads over time e.g. more ruts or potholes.

Changing how we fund the future replacement of some of our assets: We have over $821 million worth of infrastructure assets. As part of managing those assets now and for future generations, we collect money over time to replace them at the end of their life. How much we collect is based on how much it would cost to replace those assets (their valuation). For our stormwater network, that would mean collecting $12.1 million over the next ten years. Except, we only have $4.6 million worth of stormwater capital work planned in that period (a lot less than $12.1 million). So we are collecting funding for stormwater based on the value of the planned work, rather than the value of the assets. Even looking 30 years ahead, we believe the funding at this level should still collect enough to fund future replacements.

The renewal or replacement of roading assets is jointly funded by Council and Waka Kotahi. Council expects to continue to receive this subsidy (averaging $3.2 million per year) to cover the funding of almost half of the asset replacements for roading. Without the subsidy, the asset replacements would need to be funded from rates.

There are risks in this approach (e.g. not collecting enough funding at the right time) and these are outlined further in the “Unbalanced budget” section. We would regularly monitor and review these as part of our annual budget review process.

Increasing our fees and charges: While rates are our main source of income, we also receive around 16% of our revenue from fees and charges (such as pool entry fees, or building consent costs). As the costs to deliver our services have increased, we’re increasing a number of the fees and charges to remain at 16% of our revenue. There are a number of fee increases, particularly for community venues, pools and spas, cemeteries, building control and animal control fees. While increasing the fees for our services and at our sites is never popular, if we don’t increase the fees to cover the income needed, we’d have to increase rates by even more.