Our 'surplus' is something else
The City Council budget for next year includes a "surplus" of $26.5 million and City Scene reader N.D. Smith of Linwood wonders why it's needed.
The simple answer is that it is not really a surplus in the generally understood sense -- an amount above what is required.
The Council runs a balanced budget,with the planned outgoings and expected income for the year equalised. However, the balancing figure is not the "surplus" and this is a trick that often trips up reports about the Council accounts and people's understanding. In fact, it is the total rate requirement for the year which is the balancing number; the figure which is adjusted to ensure the books balance.
Earlier this year, when the Council's senior accountant Roy Baker was explaining this point to councillors, he said it would be good if another word could be used instead of surplus, because it is not in fact an excess which could be used to keep rates down.
The "surplus" actually contains incoming money for a number of activities which are separate from rates or which must be tagged for specific work. These include payments from self-funding activities such as City Housing rentals and dog licence fees, or money from Land Transport NZ and contributions from developers which must be put towards a specific community asset or roading programme. These works are often in future years and so the surplus is more a carry-over of money which needs to be kept separate from the part of the accounts which is balanced by the rates take.
"It would be wrong to use rents from City Housing tenants to lower people's rates. Any extra money in the City Housing system needs to be used to keep the housing stock in good order and ensure it's being properly replaced over time," Mr Baker says. "With the LTNZ funds, it would be foolish to use that money to subsidise rates because we wouldn't then have enough to build the roads, and if we didn't put development contributions to the use for which they were collected, we'd be liable to refund it to the developer."
Mall targeted rate
Mr Smith also pointed out that two reports in the April City Scene appeared to confuse the issue of whether the $10.3m refurbishment planned for City Mall will be done with a targeted rate or partly done with a targeted rate.
The extent to which the local business community will be asked to contribute to the cost of the upgrade has still to be decided. In its draft plan, the Council put three scenarios before the public, with varying proportions being shouldered by the surrounding businesses and the remainder being paid for from Council funds.
A decision on which of those options prevails will be made after Councillors consider public feedback over the next month or so and finalise the plan. |
