TODAY |

Tauranga city facing significant financial challenges

Tauranga residents may be stung with rates increases, as the city faces major growing pains and aging infrastructure.

Maungatapu Aerial View, Tauranga. Source: istock.com

Council staff sat down with media this afternoon to provide and update for the future including the 2020-21 budget and long term plans.

Next Wednesday council will meet to consider a range of options to respond to Tauranga’s rapid growth and its need to invest in “essential” infrastructure.

Tauranga Mayor Tenby Powell says the options reflected a legacy of under-investment in Tauranga’s future, and had rates increased in a measured and managed way the city wouldn’t be in this position.

“The truth of the matter is that this has been coming for years and we need to have courage to face the issue and manage Tauranga’s financial position in a bold, but calm and professional manner.

“It is also important to understand that we are not alone in this, as other growth councils are facing similar challenges,” he says.

The mayor says the current local government funding model “is broken” and simply doesn’t work for growth councils like Tauranga.

Highlighting the city’s traffic congestion, pressure on water, wastewater infrastructure, land supply and housing.

He says there must be a balance between “our revenue and our debt” so investments can be made in infrastructure.

“The revenue side of the equation hasn’t kept up with our needs as a result, we’re now approaching a situation where our ability to debt-fund new infrastructure will be constrained,” he says.

Council will look at multiple approaches to address the revenue and debt imbalance, such as: rates increases, delaying some capital expenditure, financial sustainability with Government, regional partners and other key stakeholders.

Asset and land sales could also be options for the future.

Up until now the council had borrowed money to fund city infrastructure, caped at 2.5 times the city’s annual revenue.

Under the current conditions that limit would breached in the coming years.

“We can no longer kick the can down the road full of pot holes, and we cannot rate our way out of this”, the mayor says.

Adding if changes aren’t made to the balance sheet – future generations will be left with a city lacking housing, infrastructure and amenities.

The full agenda will be made available for the public later tonight.