Auckland Council says it is experiencing increased financial pressure from rises in inflation and interest rates.
Auckland Council has updated the NZX after confirming it is looking at a growing budget hole of $270 million for the next financial year.
In an update ahead of the council's full Governing Body meeting this Thursday, the council said the funding gap was estimated to be $180m higher than the anticipated shortfall of $90m.
It noted "an incoming council would have a range of options and budget levers available to mitigate this".
"Inflation and interest rates have risen higher and more rapidly than economic forecasts had projected at the time the last budget was prepared," the update said.
It said as of late October, the total ongoing operating budget pressures for the upcoming financial year are estimated to be around $270m and this operating gap needs to be addressed "in a sustainable way that also supports the council's long-term financial position".
The update said council had the "financial flexibility to respond to the budget situation, but tough choices and trade-offs about the mix of budget levers will need to be made given the scale of the challenge".
It said the council needed to move towards long-term financial sustainability in addition to solving the short-term financial challenge.
In its update to the NZX, the council said it was experiencing increased pressure on operating budgets from recent rapid rises in inflation and interest rates.
It said council had the ability to respond through levers such as prudent use of debt, the level of rates increases, asset ownership options and changes to operational expenditure which could affect services.
The NZX update said the council remained strongly committed to maintaining a prudent and sustainable approach to long-term financial management.
The council was required to prepare and adopt an annual budget for each financial year and this would be discussed at Auckland Council's full Governing Body meeting.
Budget decisions would be made following public consultation early next year and the final annual budget for the next financial year would be adopted by the end of June 2023.
In its annual budget for this financial year, the council noted it would need to address further adverse impacts of higher inflation and higher interest rates in future years as these factors were uncertain.
In a statement, Auckland Mayor Wayne Brown said a double digit rates rise was not the answer.
Brown said the budget hole was a "legacy of former mayor Phil Goff papering over the fiscal cracks and passing the buck to the new Governing Body".
He said Goff had not confronted poor performance by council controlled organisations and Ports of Auckland over the past six years.
"The new Governing Body needs to find the $270 million for 2023/24 through a combination of head office savings, operational efficiencies, relentless scrutiny of the expenditure and commercial performance of CCOs and the port, and limited rates rises," Brown said.
"We must also protect the essential services Aucklanders value and keep Auckland Council's waterfront land in public ownership in perpetuity."
RNZ
