3 Jun 2020
Auckland Council is feeling the financial impact of Covid-19. The council estimates that its revenue for next year will be $525 million less than previously budgeted and it is implementing cuts to investment and service levels across the board.
On Friday the council released an emergency budget and is seeking feedback from ratepayers. The emergency budget outlines investment and service reductions, both under a 3.5% rates increase, as previously agreed, and deeper cuts under a 2.5% rates increase.
More than half of the Council’s revenue comes from sources other than rates. Revenue from events, community facilities, public transport fares, parking and fuel tax will all reduce. The Council will also see reduced dividends from Auckland Airport along with reduced revenue from Ports of Auckland and Watercare.
The Council’s long-term financial strategy sets a debt limit of no more than 270% of its revenue. The Council will exceed this debt limit in the coming year and needs to reduce expenditure to get back on track.
The emergency budget outlines the Council’s approach, including reducing or delaying capital investment, reducing operational expenditure and the sale of $200m of assets.
Under the 3.5% rates increase option, the Council proposes $2.3b of capital investment, though many projects will be delayed or stretched over a longer period.
Water, wastewater and stormwater will see $162m of capital investment deferred. This includes deferrals to Watercare’s planned capital programme and to Healthy Water’s capital programme. The Central Interceptor project and Huia 1 and Hunua 4 watermains projects will continue. Operational savings will be made with $2.25m in reduced preventative maintenance.
The Council recognises that if drought conditions continue, projects such as a new treatment plant for treating water from the Waikato River may be brought forward.
In transport, the Council will deliver $700m of capital investment in 2020/2021, compared with the $905m previously planned. All walking and cycling projects not already in construction will be paused or deferred. Safety improvements, including to high-risk intersections, will be paused or cancelled.
Auckland ratepayers have until 19 June 2020 to give their feedback.
The Council expects to formally adopt the emergency budget on 30 July 2020.