Council Borrowing a Concern?
25/08/2010 2:18:00 p.m.
AFTER borrowing more than $20 million this year, the Wellington City Council now owes more than $283.2 million.
This figure comes from a report on council spending, which was conducted by the Audit and Risk Management Subcommittee.
Southern Ward Councillor Bryan Pepperell is appalled by the amount of council debt, and disagrees that council borrowing is essential for development. He feels ratepayers will be worst hit by the debt.
“Ratepayers have everything to worry about. We are in a recessionary climate and this won’t be reflected in rate amounts. There has been a re-evaluation downwards in the property market since the [LTCCP] report. However this won’t be reflected in the rates paid. The council debt is a monkey around the neck of ratepayers,” he says.
WCC Interim Chief Financial Officer Peter Garty says ratepayers have nothing to fear.
“The [$20.3 million] is insignificant. The figure budgeted for by the Long Term Council Community Plan 2009-2019 was $325 million, so we are $40 million better off. It’s a lot less than what was originally budgeted for. Our total income last year was approximately $400million. The borrowing repayments will be spread over time and will likely be repaid by further borrowing. It’s standard for many councils to borrow to repay interest and principle, it will also be paid for by income from services, as well as rates,” he says.
A Standard and Poor’s rating, which will review council spending, including borrowing levels, is expected at the end of this week.
Garty says that borrowing is necessary to fund developments such as the Indoor Sports Centre, which will be beneficial to the region.
“Projects such as the Indoor Sports Centre will generate income for the council. Borrowing is normal, it’s part and parcel of certain businesses. I am confident of a positive feedback when we get our review later this week. The only downside for ratepayers is the interest charged,” he says.
The report revealed that the increase in the council’s level of borrowings has been utilised to complete the 2009-2010 capital expenditure programme, which funded improvement works such as the zoo’s capital upgrade programme and the continuing upgrade of the council’s housing stock.
This figure comes from a report on council spending, which was conducted by the Audit and Risk Management Subcommittee.
Southern Ward Councillor Bryan Pepperell is appalled by the amount of council debt, and disagrees that council borrowing is essential for development. He feels ratepayers will be worst hit by the debt.
“Ratepayers have everything to worry about. We are in a recessionary climate and this won’t be reflected in rate amounts. There has been a re-evaluation downwards in the property market since the [LTCCP] report. However this won’t be reflected in the rates paid. The council debt is a monkey around the neck of ratepayers,” he says.
WCC Interim Chief Financial Officer Peter Garty says ratepayers have nothing to fear.
“The [$20.3 million] is insignificant. The figure budgeted for by the Long Term Council Community Plan 2009-2019 was $325 million, so we are $40 million better off. It’s a lot less than what was originally budgeted for. Our total income last year was approximately $400million. The borrowing repayments will be spread over time and will likely be repaid by further borrowing. It’s standard for many councils to borrow to repay interest and principle, it will also be paid for by income from services, as well as rates,” he says.
A Standard and Poor’s rating, which will review council spending, including borrowing levels, is expected at the end of this week.
Garty says that borrowing is necessary to fund developments such as the Indoor Sports Centre, which will be beneficial to the region.
“Projects such as the Indoor Sports Centre will generate income for the council. Borrowing is normal, it’s part and parcel of certain businesses. I am confident of a positive feedback when we get our review later this week. The only downside for ratepayers is the interest charged,” he says.
The report revealed that the increase in the council’s level of borrowings has been utilised to complete the 2009-2010 capital expenditure programme, which funded improvement works such as the zoo’s capital upgrade programme and the continuing upgrade of the council’s housing stock.
