Tough Annual Plan choices for councillors in Covid-19 era

Northland Regional Council (NRC) members have supported an Annual Plan heavily modified to better reflect the tough economic and other Covid-19 related challenges Northland and its people collectively face over the next 12 months.

Council chair Penny Smart says in recent weeks, an estimated $2.4 million has been slashed from the council’s proposed 2020/21 budget.

Of that, just under $1.2M would come from cuts to existing budget and another roughly $800,000 from new work proposed in the Annual Plan. Another $410,000 would be saved from recruitment, with some vacant positions now not planned to be filled.

Chair Smart says as with many other local authorities, a formal period for public consultation on the NRC’s Annual Plan was drawing to a close in late March, just as the nation went into the Level Four lockdown.

Councillors had subsequently directed staff to scour existing budgets and proposed budget increases urgently, but carefully, looking for any savings opportunities without significantly compromising the work the council needed to do.

“No one would dispute Covid-19 has effectively changed most New Zealanders’ lives overnight, but what has not changed is our council’s ongoing responsibilities to plan to provide a number of services essential to keeping our environment, people and communities healthy and safe.”

Councillors say Covid-19 had significantly impacted council’s revenue, effectively leaving the council with a $4M shortfall against what it had previously budgeted for the 12 months from June 30.

That sudden decrease in revenue resulted from a number of factors including reduced investment revenue, less income from fees and charges, a fall in cruise ship and rental income and without the substantial budget cuts recommended, would have left a budgetary hole that would have required a rates increase of almost 14 percent to fill.

However, Chair Smart says councillors are extremely aware of the economic impacts of the pandemic on Northland and its people and appreciated – and had very carefully considered – that rates bills would be a key concern for many.

“Our investment income has been great in good times and has traditionally enabled us to significantly offset the cost of delivering council services and kept the level of rates lower than we would otherwise need to charge, but the proverbial ‘rainy day’ has come and we need to cut our collective cloth accordingly to hold the line with our environmental work, while also supporting our communities.”

While there had been calls in some quarters for councils across New Zealand to hold rates at existing levels, when all factors were considered, councillors collectively did not feel that was either appropriate – or prudent – for Northland at this point.

“Bluntly, we just can’t afford to lose ground on the important environmental and other critical work that’s already underway and effectively represents a very strategic, long-term investment in our region’s future; that’d just end up costing more in the long run. It’s critical we have to get the balance right.”

However, Chair Smart says what had recently been put forward by staff was a proposal that would slash a previously planned rates virtually in half, from a previously announced 8.6% increase, to one of 4.5%.

Councillors had carefully considered each of the reductions in budget that were made to achieve this, identifying priority areas to be brought back on line should council’s non-rating revenue streams generate greater returns than currently forecast.

(These included support for tangata whenua capability and capacity, modelling of highly allocated aquifers and additional support for the Enviroschools programme.)

Chair Smart says at 4.5%, the average impact on annual rates would be in the order of a $16.23 increase per year for a typical ratepayer, allowing the council and its ratepayers to move ahead with as much certainty as possible in the circumstances.

In a similar vein, the regional council was also keen to work with central government over the next year to support a range of local economic recovery work, both already announced and planned.

The community would also have another opportunity to comment on the council’s future direction via the new Long Term Plan due to be produced next year.

Council anticipates adopting its Annual Plan 2020/21 at its regular formal council meeting on Tuesday 16 June.