February rates paper issued

Auckland City today released the latest proposed rating policy options for 2003/2004.

The city’s director of finance, David Rankin, says the February policy paper contains a range of rating policy issues and models, many of which were first published in November last year at the time of the Annual Plan Direction Setting meeting.

Mr Rankin says council officers have undertaken further policy work at the request of the councillors and the results will now be discussed at the Finance and Corporate Business Committee meeting on Wednesday, 26 February 2003. The paper will then proceed to the Combined Committees meeting on 11-13 March 2003.

When preparing the February paper, officers considered a number of factors that will affect how much ratepayers pay this year. These included: inflation the 2002 property revaluation new rating legislation uniform charges, and the difference between business and residential rates.

Inflation recovery only

The February proposed rating policy options paper models how best to obtain the 2.5 per cent rates increase, or $7.6 million (including GST), estimated to be necessary to preserve the council’s current income in real terms.

This increase is within the estimated rate of inflation.

It will not result in an increase in rates revenue for the council in real terms.

Mr Rankin says officers were asked by the council to increase the targeted rate for waste collection to capture the proposed rates increase. The February paper recommends increasing the targeted rate for waste collection from $47 to $110 to provide the 2.5 per cent of extra revenue required to preserve the council’s current income in real terms.

Mr Rankin says the increased targeted rate accurately reflects the cost to council of providing the waste collection service.

A uniform annual general charge to help achieve a better balance

The February paper also shows the effects of replacing part of the annual-value-based general rate with either a $50, $100 or $150 uniform annual general charge for each rating unit.

The chairperson of the council’s Finance and Corporate Business Committee, Councillor Douglas Armstrong, says with the exception of the $47 targeted rate for waste collection, the city’s current rating system is based on property values only.

“This ignores the fact that ratepayers have equal access to, and benefit from, many council-provided services, such as parks, sporting grounds, pools, libraries and footpaths. If introduced, the uniform annual general charge would result in every ratepayer contributing the same amount to certain council-provided services,” Councillor Armstrong says.

Councillor Armstrong says “if a uniform annual general charge is introduced, some residential ratepayers will pay less than they would have under previous rating schemes. Others will pay more.”

“The council believes a uniform annual general charge will help achieve a better balance. It will not result in a rates revenue increase,” says Councillor Armstrong.

Rating Differentials

Mr Rankin says the council has over recent years been working steadily towards reducing the loading put on business rates, what is known as the rating differential.

However, because of the impact of the 2002 property revaluation on some ratepayer groups, the council requested that officers not apply the fifth step of the differential strategy in 2003/2004 and that progress toward the 10 year differential targets resume in 2004/2005.

Because of the increased burden on some residential ratepayers as a result of the combined rating changes, council officers have been asked to explore ways of limiting the impact on residential properties by altering the business differential, says Mr Rankin.

Tumultuous year of change

Councillor Armstrong says “this year is a tumultuous one for the city’s rating system.”

“This is made even more so given the government’s new rating legislation which changes who is responsible for paying rates on many properties.”

“Comparing this year’s rates, once they are set, to last year’s, will be next to impossible. It would be comparing apples with oranges, as the rates will be based on two very different systems.”

“There is, however, one over-arching constant. Due to the council’s prudent financial management we are able to keep our promise to hold rates within the level of inflation,” says Councillor Armstrong.

“The committee will carefully consider the officers’ February paper at its meeting, as well as the views of residents and ratepayers when it consults the public on the draft annual plan,” Councillor Armstrong concludes.

A copy of the February proposed rating policy options for 2003/2004 paper can be accessed at the following web address: http://www.aucklandcity.govt.nz/council/members/committeemeetings/finance/a200302260930.asp

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