Tauranga City Council's $3.7million rates surplus is going to be returned to the people who paid it – the ratepayers.
Councillors decided yesterday to spend the $3.2million surplus ($3.7m minus $500,000 automatically allocated to debt repayment according to council policy) on reducing the cost of rates next year.
The surplus arose largely due to lower operational costs and interest savings.
Councillors were presented with three options on what to do with the remaining $3.2 million.
They included placing all, or some, of the money in the risk management reserve, and or paying off some of the council's $406million debt. While $3.2 million doesn't do much to reduce the $406m, every $1million of debt reduction reduces interest by about $60,000.
The $3.2 million could save the council $500,000 in interest payments in the next three years.
Councillor David Stewart proposed keeping the money, and using it to smooth over expected financial fluctuations.
While councillor Bill Faulkner said he was aware of the financial advantages of keeping it and using it for debt reduction, it was a moral issue and the money belongs to ratepayers and should be used to reduce next year's rates.
The surplus is expected to reduce next year's expected rates demand by 1.4 per cent - but it means a bigger percentage increase in rates the following year, to bring the city's finances back on track.
12 comments
A Moral Issue
Posted on 20-11-2012 13:31 | By Sambo
Dam right, to even think of retaining it stinks, the reason the debt is like it is, is because of Council incompetence, is the cheque in the mail, or is it a waiting game!!!
dur
Posted on 20-11-2012 14:40 | By Capt_Kaveman
lets just be in debt for eva. put it on the loans and keep reducing costs and debt simple oh thats right our council members know better
BALDERS ON THIS
Posted on 20-11-2012 16:04 | By YOGI
Just 1.4% effect on rates? The rates collect last year was $99 million so that means $3.2 million 'reduction' is a 3.23% reduction in overall rates bills, so allowing for the CPI + ignoring the max of +2% (no reason at all for this anyway) means the 2013/2014 rates should reduce by say around 1.4% but I bet that there will still be a increase anyway of around the 3-3.5% therefore in effect a 5% increase so breaking (AGAIN) the promises to ratepayers AGAIN!
Moral issue? Yes. Moral option chosen? No!
Posted on 20-11-2012 16:12 | By Rich
I disagree with Bill Faulkner's assessment that the moral approach is to give the money back to the current ratepayers. Most of the current ratepayers will be ratepayers in Tauranga Moana next year, too, so by not using the money to pay back more of the massive amount of debt this year, when the opportunity has presented itself, the current councillors have effectively chosen to rip-off the ratepayers of today, and have probably extended, by more than a year, the time frame over which the debt will be repaid. Keeping ratepayers under the burden of debt is not responsible management of ratepayers money. It could even be described as "immoral". Even the article's closing sentence highlights that the city's finances are not on track. That implies that as well as unforeseen events affecting the ability of councillors to manage the funds, there has probably been some mismanagement. That view is certainly not mitigated by the recent announcement. I think that $3.5M to debt repayment, and $.2M to "smoothing over fluctuations" would yield a far better return to ratepayers than the chosen path.
Little Jack Horner sat in a corner ............ Wots up Doc ?
Posted on 20-11-2012 19:25 | By Scambuster
This is simply playing with something and it ain't the financial figures.No money has been saved at all they have just temporarily deferred some of their fiscal fantasies like Southern Pipeline 'to die another day' as they say.These turkeys have all worked out that the next rating year is also 2013 election year and they don't want an early Xmas. However might be peeing into the wind on that bit of strategy judging by the mood of the community.
@ rich & scambuster
Posted on 21-11-2012 08:47 | By SpeakUp
You hit the nail on the head. THERE IS NO SURPLUS when you have to service 400000 plus compound interest. @ Bill Faulkner: such voter bribes will not provide absolution of mismanagement for any councillor while having been in office. All is recorded, nothing will be forgotten. -Citizens Monitoring Council-
Not Surprised
Posted on 21-11-2012 08:48 | By Jitter
50% of TCC Councillors think the ratepayers are idiots and won't recognise a bribe when they see one. I agree with Scambuster that they are looking forward to the 2013 Local Body Elections and hope this rate reduction will get them back in. However it might be too little too late as ratepayers have long memories and will remember all the cocked up TCC projects over the years. The latest one being the debacle over the tsunami sirens. Seven years to get anything off the ground and then the siren selected (Meerkat) was not even tested locally so that ratepayers could rate it's performance !!! Bloody hopeless.
No Bribe, just applying transparency.
Posted on 21-11-2012 09:55 | By Murray.Guy
The City Council has an agreement with the community to provide specific new capital works, to maintain exiting assets, to provide agreed services. To the best of it's ability it determines the cost to ratepayers. At the completion of the agreed items of expenditure there is money left over - It is given back. No bribe, just what most expect of their children when sent to the shops to buy milk! The rate rebate must be kept separate from next years rating requirement to maintain the integrity of processes.
No Bribe, just applying transparency
Posted on 21-11-2012 12:26 | By Capt_Kaveman
no common sense here there is there
@ Murray
Posted on 21-11-2012 14:00 | By SpeakUp
To hell with bureaucratic processes! THEY are the reason we are in such a horrible fiscal state. And, Murray, if you owe $$$ to the dairy your kids will not bring back any change, ay?
To Murray Guy
Posted on 21-11-2012 14:58 | By Rich
Thanks for responding to people's postings in the SunLive forum. Your efforts to promote greater transparency in the Council's dealings with the public is admirable. Regarding that point, I am sure that the majority of informed Tauranga based ratepayers would not have seen a more substantial paying down of debt as a deceptive, hidden, or underhanded act, or even as a wasteful use of the money they had contributed to the ongoing management of the city in which they have chosen to invest. On the contrary, I am certain that many people would have been thrilled with seeing a decent bite chomped off the amount owed. Unlike some of the others who submitted posts in relation to this article, I had not assessed as a bribe the councillors' choice to temporarily return funds to the ratepayers. The analogy about the child returning all the change to the child's parent after a trip to the shop to purchase milk seems, at surface level, to be a cute, clever and reasonable comparison. I believe it's actually only one of those. The sad reality is that the councillors (as a whole) have acted like children favouring junk food and spending reckless amounts of time with a game console in their hands instead of making healthy choices and engaging in activity to the betterment of all. Bribe or not, not paying down the debt was not an act of integrity. If the councillors truly have the view that it is okay to only pay back $.5M when they could pay back seven times that amount, with limited downside and massive upside, allowing everyone to be better off---assuming the councillors wouldn't go and blow it, again, by inflicting more debt on the ratepayers in response to an immature "got to have it now" mentality---, then the councillors may find that that foolishness is pummelled out of them by disillusioning blows to the brain in the form of escalating ratepayer dissatisfaction prior to the next election. Based on the apparent ratio of the number of people who take any notice of what councillors do to the number of ratepayers in the community, I doubt that you need to be concerned, as a group, but there are definitely some thinkers out there who will see the recent choice as deserving of a vote for other candidates. I am more confident than not that you and your colleagues have chosen what you (as a collective) believe is the best choice given the various factors involved. Despite that, my strong opinion is that you guys "got it wrong" on this one. My expectation is that that will become more obvious to you, in time.
No Bribe, just applying transparency
Posted on 26-11-2012 18:52 | By PLONKER
Murray I appreciate your efforts towards "transparency" however TCC's record is rampant with deception and doubtful management that is shown by what Bill Faulkner said a while ago "Everything that Council does costs 4x as much as anyone else". That about sums it all up really.
Leave a Comment
You must be logged in to make a comment.