City gets the benefit of bonus $3.7m rates surplus

The Tauranga City Council faces a good problem next month - how to spend a $3.7 million surplus in its rating account.

The council collected $99.7 million from ratepayers for the financial year which ended June 30, and it spent $96 million.

With the council bound by its rules to put at least $500,000 of the surplus into reducing debt, it was still left with a $3 million decision before it meets on September 25.

The savings were largely caused by the impact of lower than expected interest rates. Another bonus was the unbudgeted penalties received from people who did not pay their rates on time.

Council financial controller Paul Davidson told yesterday's council meeting that one of the spending options for the surplus was the $1.2 million write-off of planning costs incurred in the failed Mount Hot Pools redevelopment project.

His financial report also highlighted the impact of the economic slowdown on council revenue. Revenue ended up $2.3 million under budget, helped by drop-offs in consent fees and downtown parking.

The reduction in revenue was more than balanced by favourable interest rates from the council's finance income. Instead of a break-even budget, the year ended with a net saving of $3.6 million.

Mr Davidson said development contributions of $8.3 million were $3.2 million less than what the council expected to collect.

The council put aside $4.2 million less in depreciation than expected due to revaluations and a lower capital spending programme.

An $8.2 million over-spend in "other expenses" included the $2.3 million that came out of Mount Hot Pools depreciation reserves to pay for the emergency pool upgrade last year.

The over-spend also included asset write-offs.