Tauranga City Council ratepayers will face a 2 per cent rate rise in the coming year after council approved its Annual Plan yesterday.

Council approved a gross increase of 2.6 per cent, which includes a growth of 0.6 per cent, making the average general rates increase per property 2 per cent - within council's self-imposed rate cap of 3 per cent.

Rates on an average Tauranga property will rise between $40-$70 a year.

But council's self-congratulatory bubble was popped when councillor Catherine Stewart reminded councillors the city is looking at a rate increase of at least 10 per cent next year.

'I believe we do need to be much more careful in budgeting,” says Catherine.

'With $43.5million for stormwater, the bow wave for that, the effect on rates next year - we are looking at 10 per cent at this stage. I'm not quite as enthusiastic as some of the commenters.”

The council has to show restraint and be more careful in choosing priorities, says Catherine.

Her comments came after Mayor Stuart Crosby reflected on how the rate describes where the city is at in delivering services in a cost effective way.

He says this reflects in part the governmental pressure being applied to local government to focus more attention on fiscal responsibility.

'And they are below the self-imposed rates cap, less than two per cent, the city's lowest rates requirement since 1989 at least,” says Stuart.

On average the rates rise per property will be between $40-$70 per year for an average sized property, depending on its valuation.

For properties valued at $350,000 paying rates of $2094, rates will rise by $47 to $2141 a year.

For properties valued at $500,000 paying rates of $2392 rates will rise by $61 to $2453 a year.

The general rate is $0.00208608 in the dollar capital value on all rateable units. The commercial or economic development rate is $0.00047228 on all commercial properties. The uniform annual general charge is the same as last year, $720.

The water rate is $1.73 per cubic metre of water consumed - 3 cents a cubic metre higher than last year. The base rate is calculated on connection size; houses with 20mm connections pay $27; houses with 25mm and 32mm connections pay $53. Unmetered properties will pay $600 for each separately used part of the rating unit.

The wastewater rate is $352 for each rating unit, an increase of $7. Commercial properties are rated $352 for each toilet in a commercial property. Unconnected rating units will pay $176.

The Lakes targeted rate is $202.78. The Papamoa Coast Subdivision targeted rate is $250.56 per rating unit. The Excelsa subdivision targeted rate is $49.76.

The mainstreet rates apply to commercial properties in the three business zones; Tauranga Mainstreet $0.00065896 per dollar of capital value; Mount Maunganui Mainstreet $0.00092157; Greerton $0.00183035.

A ten per cent penalty applies on rates assessed before July 1, 2013 which remain unpaid on July 1 2013.