Calculating the rates

To keep the City going and improve social services requires an overall rating increase for the Christchurch City Council of 2.38 per cent.

This is the figure included in the 2000 draft annual plan. Submissions are now being sought on the draft plan before a final plan will be adopted 6 July.

To arrive at the increase the total cost of all Council services for the next financial year was worked out, including operating costs, debt servicing costs, and the cost of the depreciation of assets. This came to $236 million.

When those services that are funded by user charges are deducted, this figure is reduced by $82 million to $154 million.

Taking into account the dividends received by the Council from its trading companies, interest earned, and the funding contribution to capital projects, the figure is reduced further to $128 million. This is the amount that the Council needs to collect by rates.

All ratepayers pay a Uniform Annual General Charge that is set at $105. Deducting this figure from the total required from rates leaves $116 million. This figure is then divided among the three different groups of ratepayers: residential, commercial and rural. The split is made according to a detailed formula, which assigns a share of the benefits from each Council service to each group of ratepayers.

For example, roads provide a significant benefit to commercial and rural ratepayers. Therefore, these groups are assigned a greater proportional share of the costs associated with roads - whereas libraries chiefly benefit Christchurch residents, who are required to pay a greater share of the cost of libraries than the other ratepayer groups. When all the benefits have been shared among each ratepayer group, the split of the $128 million the Council needs to provide all its services is as follows:

• Residential 71.7 per cent
• Commercial/Industrial 26.0 per cent
• Rural 1.5 per cent
• Institutions 0.8 per cent.

This means that $92 million is the total required from all Christchurch residential ratepayers. This is 2.25 per cent more than the Council required from residential ratepayers last year. The $92 million is then shared among the 120,368 residential ratepayers according to property values.