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WELLINGTON CITY COUNCIL DRAFT ANNUAL PLAN 08/09
12 OVERVIEW
OVER
VIEW
OPERATIONAL SPENDING
We’re forecasting total operational spending of
$328 million during 2008/09.
Operational spending provides for all of our day-to-day operations and
services – things like waste disposal, water supply, operating the transport
network, issuing building and resource consents, maintaining parks and
gardens and so on.
37% of our operational spending relates to the Environment strategy area. This
includes expenditure in relation to the provision of water, wastewater and
stormwater, as well as green open spaces. Other significant areas of operational
spending include transport, and social/recreation services.
RATES
We’re proposing a 4.8% real increase in Council rates
for 2008/09.
The Council receives operational spending from a combination of general rates,
targeted rates, user charges, grants/subsidies, and other income
(such as dividends).
The Council sets targeted rates to fund costs associated with the Council’s water,
sewerage and stormwater systems. Separate targeted rates are set for Marsden
Village, Downtown, and Tawa driveways.
There are two categories of general rates: the base general rate, and the
commercial sector general rate. The Council has a rates differential in place
that decides the share of general rates paid by residents and businesses.
It is proposed to gradually reduce this differential over time. In 2007/08, the
commercial sector general rate was 4.2 times higher than the base rate for
a property of the same value. We propose to reduce this differential so that
the commercial sector will contribute 3.8 times more general rate than the
residential ratepayer for a property of the same value in 2008/09. By 2011/12,
we aim to reduce this differential to 2.8:1.
When we decide whether to fund a service from rates
or other sources, we consider a wide range of factors
including who benefits.
Decisions about how to fund a service are guided by our Revenue and Financing
Policy. Under the policy, for each activity we consider the following criteria:
• who benefits – individuals, an identifiable part of the community, or the
whole community
• whether the people or groups who benefit could be excluded from the service
if they don’t pay, and whether excluding them would be fair and equitable
• whether the benefits will extend to future generations as well as current ones
• the ‘polluter pays’ principle – that people and groups should pay for harm
they directly cause
• overall impact on social, economic, cultural and environmental well-being.
We then agree the proportion of funding that each sector will contribute
to pay for each activity. For instance, tourism promotion is funded through
the downtown levy (the retailers, restaurants, bars, hotels and other businesses
located in the downtown area who benefit from visitors’ spending), while
our city safety programme, which benefits everyone, is funded through the
general rate.
The rates increase for 2008/09 is lower than we had
previously forecast.
In our amended 2006-2016 long term plan, we had forecast a rates increase of
7.1% for 2008/09. The lower-than-previously-forecast figure reflects our efforts
to manage the city’s finances efficiently and prudently. While we’re proposing
some new projects, we’ve also sought operational efficiencies and rescheduled
some of our work programme to keep the rates increase below previously
forecast levels.
The actual rates changes affect each household
or property differently, depending on changes in
capital value.
The rateable capital value for the average residential property has increased
by 13% to $530,000 over the past year. The rates on this property for 2008/09
will be about $1,846. Rates for your property will be higher or lower than this
depending on the value of your property. It is important to note that an increase
in the capital value of properties in the city does not mean that the Council
automatically collects more rates. We set the overall level of rates to cover the
operating expenditure of the Council less any external income (from sources
other than rates) we receive. We then use, in most cases, the capital value of all
properties to allocate the rates requirement.
RATES, CHARGES AND SPENDING
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Urban Development 7%
Transport 15%
Economic Development 7%
Environment 37%
Cultural Wellbeing 4%
Social and Recreation 26%
Governance 4%
OPERATIONAL SPENDING
4% 7%
15%
7%
37%
4%
26%
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WELLINGTON CITY COUNCIL DRAFT ANNUAL PLAN 08/09
OVERVIEW 13
OVER
VIEW
The final rates increase for an individual property will depend on:
• the overall increase in the Council’s rateable budget
• any changes in the rates differential or uniform rates applying to that
property
• the growth in the number of rateable properties in the city (e.g. due to
construction of new houses, apartments and business premises)
• the change in a particular property’s capital value compared to the average
change in capital value for other properties.
Indicative residential property rates (without a water meter)
We’re going to re-introduce three-yearly property
valuations in line with other local authorities
around the country.
Valuations were originally produced five-yearly then three yearly until 1995,
when we moved to annual valuations in response to particularly volatile
property market conditions in the late 1980’s and early 1990’s. The move to
annual valuation was done to reduce the impact on property owners in areas
that had experienced above average increases for several years in a row.
We’re moving back to three-yearly valuations because the conditions
that originally drove yearly valuations have changed. The move back to
a three-year cycle will save the city more than $750,000 over three years.
The next revaluation of Wellington properties will be in 2009, with
three-yearly valuations after that.
Water Rates
This year we are proposing to increase the per cubic meter charge for
ratepayers who have a water meter installed.
The last increase in the metered water charge was in 2004/05. This year
we propose to increase the charge for those ratepayers with a water meter
installed from $1.37 per cubic meter to $1.58 per cubic meter to ensure that
those with a water meter continue to pay their fair share of the costs of the
water activity.
REVENUE AND FINANCING POLICY
We are proposing the following variations from our Revenue and
Financing Policy.
We are increasing the proportion of the Building Control and Facilitation
activity to be funded by user charges from 60% to 65%, to better reflect the
proportion of costs the Council is seeking to obtain from the direct beneficiary.
We are decreasing the proportion of the Promoting and Hosting Cultural Events
activity funded from non-rates revenue from 25% to 20% to reflect a transfer
of events into this activity. This is fiscally neutral at an overall Council level.
These changes will be formalised into the Revenue and Financing Policy
when the long term plan is revised next year.
USER CHARGES
We’re also proposing to change fees and charges for
some of our services.
We are proposing to raise fees in a number of areas this year. The majority of
these increases are minor and reflect cost pressures. Increasing fees by a little
each year ensures that ratepayers are not over-subsidising services the Council
provides, and helps to avoid larger increases in future. Activities for which fee
increases are proposed include:
• Development control and facilitation (resource consent fees etc.)
• Sandwich boards
• Landfill charges (recycling levy)
• Marinas
• Sports fields
• Burials and cremations.
A full list of changes to fees and charges is included in the appendices.
Decisions about user charges and ratepayer funding of each service are made
in accordance with our Revenue and Financing Policy, and depend on a range
of factors including who benefits from the service (see above).
Trade Waste Charges
This year we propose to introduce a trade waste charging regime. This will
mean that businesses that discharge trade waste into the sewer will pay
charges that better reflect the cost of transporting, treating and disposing of
this waste. It will also provide an incentive for these disposers to reduce the
level of trade waste they produce.
The Council will not collect any more money overall from the introduction of
these charges. It just means that all commercial ratepayers will pay a little less
in sewerage rates. The full draft trade waste policy is included in
the appendices.
We’re proposing a 4.8% increase in Council
rates and some increases in user charges.
2008/09
Capital Values
$
2008/09
Rates
$
200,000
837
3000,00
1,143
400,000
1,449
500,000
1,755
600,000
2,061
700,000
2,366
800,000
2,672
900,000
2,978
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WELLINGTON CITY COUNCIL DRAFT ANNUAL PLAN 08/09
14 OVERVIEW
OVER
VIEW
E E
CAPITAL SPENDING
We’re continuing to invest in the infrastructure
of the city.
Capital spending pays for property, plant and equipment. This includes buying,
building, developing and upgrading assets such as buildings, roads, bridges,
water and stormwater pipes, and so on.
We fund capital expenditure from depreciation, borrowings, reserves
and bequests, Land Transport NZ and other subsidies, and development
contributions. For asset renewals, the main funding source is depreciation.
For new assets, the main funding source is borrowings.
We aim to manage our borrowing within the following targets:
• total Council borrowing is less than 10% of equity and less than 150%
of income
• net interest is less than 15% of income and less than 20% of rates income
• liquidity is greater than 110%.
We’re forecasting capital spending (excluding carried forward expenditure and
loans to other organisations) of $120 million for 2008/09. That’s an increase of
$21 million from 2007/08, but compares favourably with our previous forecast
for 2008/09 of $145 million. This change reflects the reprioritisation of some
capital works we’d budgeted for in our long-term plan – further information is
provided in the “Our Activities in Detail” chapter.
VARIANCES FROM LONG-TERM PLAN
Each year we review the underlying assumptions and costs that make up
each activity. For each activity we consider the impact of a number of
factors, including:
• changes in direct costs
• updated forecasting assumptions
(including changes to the forecast timing of projects)
• the allocation of indirect and organisational costs/efficiencies
• the appropriateness of inflation and CPI adjustments
• changes affecting our opening position (e.g. updated borrowings forecasts)
This means that the proposed costs for each activity may differ from those we
had originally forecast for 2007/08 in the long term plan.
Further information is provided in the “Our Activities in Detail” chapter.
CONSULTATION
What do you think of our proposals?
You can make comments online or write to us.
Comments can be made online at www.Wellington.govt.nz. Or you can
write a submission, send a letter or email, or use the comments form in
this annual plan or our Absolutely Positively Wellington newspaper.
Send comments to:
• Annual Plan, Wellington City Council, PO Box 2199, Wellington
• Annual.Plan@wcc.govt.nz
You also have the opportunity to present your submission in person to
a subcommittee of councillors.
We need to hear your views before 5pm on 19 May.
Come to a meeting.
You can find out more about our proposals and the thinking
behind them by coming to a meeting. We have the following
public meeting scheduled:
• 2008/09 draft annual plan meeting – on Tuesday 6 May at 7pm.
The meeting will be held in Committee Room One in the Council
buildings at 101 Wakefield Street.
If you are a member of a resident association, sports club or any
other organisation or group and would like to talk about the draft
plan at one of your meetings during the consultation period please
contact 499 4444.
Your views do matter.
Every year, we change or confirm our plans in response to public input.
We appreciate the submissions we get, and we do take them seriously.
The Mayor and councillors will get copies of every submission.
A subcommittee will listen to oral submissions in late May and they’ll
report to our Strategy and Policy Committee in June. The committee
will discuss your views and start finalising the work programme for
the year. Then, on 27 June, the full Council will meet to finalise the
programme.
If you’ve made a submission, we’ll write to you and let you know what
was decided. Our annual plan will be published in July.
COPIES OF THIS PLAN
You can get extra copies of this annual plan from libraries, service
centres, or Council offices. If you phone 499 4444 we’ll send you a
copy. You can also download copies from www.Wellington.govt.nz.
CAPITAL SPENDING
Urban Development 9%
Transport 24%
Economic Development 2%
Environment 25%
Cultural Wellbeing 3%
Social and Recreation 28%
Governance 9%
3%
25%
2%
24%
9%
9%
28%