Part A: Introduction
Where the funding comes from
The Council uses a several mechanisms to fund our operational and capital expenditure. Rates are expected to fund 59 percent of our operational expenditure. We also collect revenue from fees and user charges, grants and government subsidies and other sources such as interest and dividends from investments. Capital expenditure is funded through borrowings, grants and government subsidies, and development contributions for projects that aim to meet the demands from growth.
Explaining our borrowing positionTop
We borrow to fund upgrades to our assets or to invest in new infrastructure. This allows us to spread the cost of funding this expenditure over the multiple generations who will benefit from the investment.
Council debt is currently capped at a maximum of 175 percent of annual income during Our 10-Year Plan. It is expected to be 125 percent by the end of 2019/20 – the same as a household that earns $75,000 a year having a mortgage of about $95,000.
For 2019/20 total borrowings are forecast to be $684 million at the end of 2019/20, this equates to 125 percent of operating income.
The forecast average borrowings per resident at the end of 2019/20 are $3,197.
Explaining your ratesTop
We are proposing to increase average rates by 3.9 percent in 2019/20. The Council is planning to collect $325 million (GST exclusive) of rates during 2019/20. This figure reflects our efforts to manage the city’s finances efficiently and prudently.
Our rates revenue is split between general rates and targeted rates. General rates are paid by all ratepayers and applied to services which benefit the whole community, for example parks, libraries, pools, and roads and footpaths.
Targeted rates are paid for by an identified group of ratepayers. Examples of targeted rates are water, stormwater, wastewater, and Business Improvement Districts (BIDs).
The Council delivers a broad range of quality services to its residents – everything from roads, footpaths, libraries and festivals, museums, sportsfields and animal control. The total value of all the facilities and assets Council uses to deliver its services to Wellingtonians is $7.6 billion. The cost of delivering and running Council services in 2019/20 will be $557 million or $7.11 per day, per resident.
Capital expenditure is used to renew or upgrade existing assets or to build new assets to provide a higher level of service or account for growth. Our assets include buildings, roads and footpaths, water, stormwater and wastewater pipes, libraries, swimming pools, and sportsfields.
Operating spending for 2019/20Top
Total planned operational expenditure to keep the city running for 2019/20 is $557 million. This is a small increase on what was identified in Our 10-Year Plan. The increase primarily relates to inflation on personnel costs, contracts and increased depreciation due to new assets and a property revaluation.
Operating expenditure by activity areaTop
The graph illustrates the proportion of planned operational expenditure, excluding revenue, in each of our strategic activity areas. The biggest area of operational expenditure is Environment at 33 percent of the total gross opex of $557 million. Social and Recreation and Transport follow at 26 percent and 16 percent respectively. Economic Development, Urban Development, Council organisational projects, Arts and Culture, and Governance follow each with less than 10 percent of total operational expenditure.
Capital spending for 2019/20Top
Total planned capital expenditure for 2019/20 is $240 million. This is a small reduction from what was included in Our 10-Year Plan. The variances primarily relate to the timing of some major projects. For a more detailed explanation please see Part B: Our Work in Detail.
Capital expenditure by activity areaTop
The graphic illustrates the proportion of planned capital expenditure in each of our activity areas. The biggest areas of capital expenditure are Environment, which includes the three waters, and Transport, each at 24 percent of the total capex of $240 million. Urban Development, Social and Recreation, and Council organisational projects follow at 18, 15 and 10 percent respectively. Arts and Culture, Economic Development, and Governance follow, each with 10 percent or less of total capital expenditure.
What it costsTop