By Prudintis (a Hamilton City Ratepayer)

Last year’s reported “balancing the books” deficit of $29.75 million (See Page 167 of the Hamilton City Council’s 2022-23 Annual Report)  is likely to be repeated to June 2024 with the expected deficit increasing to $36.6 million (See Finance & Monitoring Meeting Agenda 29 February 2024 – Page 51).   These Annual Plan budgets predicted operating deficits of $14.4 million in 2023 (See Page 167 of the 2022-23 Annual Report) and $17.1 million in 2024.

The actual operating deficits are more than double those in the approved budgets!

These increased deficits indicate the poor budgeting skills of the staff, Mayor and Councillors when annual plans are prepared, debated and then consulted with the community. Once approved, the spending does not match the budget expectations. How can they be so wrong?

There must now be considerable concern around the accuracy of the 2024-2034 Long-Term Plan (LTP) budgets recently presented for consultation. Does the Council even have the competency to prepare accurate budgets for community consultation?  Does Council have the competency to approve these budgets?

Even with the proposed rates increase of 19.9% and successive rate increase proposals over future years, Council will still not be able to balance its books until 2026/27 according to projections in the draft Long-Term Plan (See page 37).

Council operates with a Financial Strategy approved in each council term which includes, as one imperative, that Council will balance everyday expenditure with everyday income.  However, Council has not been balancing its books consistently since 2007.

Page 13, Hamilton City Council’s 10-Year Plan 2012-22

Page 12, Hamilton City Council’s 10-Year Plan 2015-25

Page 68, Hamilton City Council’s 10-Year Plan 2018-28

Page 85, Hamilton City Council’s 2021-31 Long-Term Plan

Every Long-Term (10-year) Plan budget over the last 12 years has predicted Council would balance its books after 3-5 years and would then continue in surplus for the remainder of the Long-Term Plan. The evidence shows that Hamilton City Council struggled to “balance the books” even once since 2008, instead almost every year was found to be a deficit year on the “Everyday cost and revenue charts”. Hamilton City Council has occasionally boasted of achieving a surplus, though this appears to be from provisional figures or different ways of measuring, adjusting, or calculating the “balancing the books” values.

“The provisional figures for the 2014/15 financial year will be presented to elected members on Thursday and marks the fulfilment of one of the core planks of the council’s financial strategy.

The strategy was adopted in 2011 and sets out the council’s key financial performance measures – including balancing the city’s books.

The balancing-the-books measure is more conservative than a traditional accounting surplus as it excludes non cash items.

Hamilton Mayor Julie Hardaker said the $5m surplus was an “outstanding achievement” and meant the city was no longer borrowing money to meet its day-to-day expenses.”

Aaron Leaman, Waikato Times, August 2015, Hamilton City Council records $5m balancing-the-books surplus

 

The current Long Term Plan draft makes the same predictions as seen in earlier Long-Term Plans.

Page 37, Hamilton City Council’s 2024-34 Long-Term Plan Consultation Document

How can we, on the evidence outlined above, believe a surplus can possibly be achieved in 2027 and thereafter?

The problem is simple:  Spending on ‘Councillor wants and nice to haves’ are added each year with the rate increases approved being woefully inadequate to keep pace with the level of the spending.

Individual staff/Councillor/Mayor egos under-sell the costs of additional projects which inevitably leads to increased expenses. When combined with other ‘wants and nice to haves’ the result is inevitably increased expenditure which always beats the rates increase hands-down!

Fiscal prudence is easy and almost all of us achieve it on a regular basis in our own household and personal spending. Why can’t our Councillors do the same with our rates money? Ask the Councillors in your submissions and ask them for an honest answer!

 

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Consultation finishes on 21 April 2024 for the Hamilton City Council Long-term Plan 2024-2034