Agenda of Regional Council - Tuesday, 26 November 2024


Informal Workshop Paper
To:	Regional Council
	26 November 2024
From:	AJ Prinsloo, Finance Manager and Kumaren Perumal, Chief Financial Officer
	Mat Taylor, General Manager, Corporate

2025/26 Draft Annual Plan

1. Purpose

The purpose of this report is to provide an update on the 2025/26 draft Annual Plan (draft AP) process, confirm direction provided at the Council workshop on 13 November 2024, and seek further guidance.

2. Guidance Sought from Councillors

Consider and provide guidance on the following:

· The proposed rates increases for general rates and the total of targeted rates for public transport

· Using the relevant reserves to smooth the rates increases.

3. Discussion

3.1 Background

The Long Term Plan 2024-2034 (LTP) year two (2025/26) signalled increases of 8.2% increase for general rates, and 6.3% for total targeted rates. At the first draft AP workshop held on 16 October, Council requested staff to review activity budgets to reduce the rates increases.

At the second draft AP workshop on 13 November 2024, potential savings were identified for Council to consider and provide direction. The activity budget adjustments (refer to Attachment 1) have been processed in response to the direction received.

3.2 Financial Envelope and Rates Impact

3.2.1 Proposed Rates Increases for the 2025/26 draft Annual Plan:

General Rate Increase: 3%

Budget adjustments of over $3 million have been identified which will reduce the General Rates for 2025/26. They are made up of cost savings, deferrals, additional revenue, and operational efficiencies. Setting a target of 3% (0% real) General Rates increase is achievable through these measures, together with using the Regional Fund Reserve to smooth rates impacts.

Public Transport Targeted Rates Increase: 5%

In previous workshops, savings totalling over $1 million for public transport have been identified that will reduce the total public transport targeted rate requirement for 2025/26. When combined with 2024/25 forecast budget underspends and use of reserves, 5% increase in total Public Transport Targeted Rates is achievable.

Regional Fund Reserve forecast

We are currently forecasting a closing balance of $4.5 million for the Regional Fund Reserve for the 2024/25 period. While this forecast is subject to in-year financial performance and several other items currently under consideration that may impact the final balance, based on current known factors, there will be sufficient reserves available to smooth the rating impact as required.

Ongoing Work and other cost pressures

Staff will continue to work towards these targets and incorporate decisions made at the December Council meeting around the proposed budget for the draft AP. As part of this process, budgets are being refined to inform subsequent versions of the draft AP, which will be presented to Council in future workshops for review and direction.

3.2.2 Impact on Selected Property Types

To assist in understanding the potential impact of the proposed rates increases, we have compiled a list of sample properties and the indicative rates changes for each. These examples are provided to illustrate the potential effects on different property types; however, it is important to note that these are only indicative. A number of variables can influence the final rates calculation. The examples are intended as a guide to inform discussions and should not be considered definitive projections.

District and Property Area	2024/25 Rates ($)	2025/26 Draft Rates ($)	Variance ($)	Percentage Increase %
Tauranga City
Property A - Pāpāmoa	$799	$839	$40	5%
Property B - Otumoetai	$704	$741	$37	5%
Property C - Gate Pā	$686	$722	$36	5%
Whakatane District
Property D - Matatā	$427	$442	$15	3%
Property E - Ōhope	$417	$431	$14	3%
Property F - Whakatāne	$974	$1,063	$89	9%
Property G - Edgecumbe	$1,031	$1,081	$50	5%
Property H - Whakatāne, 7850ha, WT and RT River Schemes	$58,893	$64,314	$5,421	9%
Property I - Murupara, 4762 ha, RT River scheme	$17,000	$17,932	$933	5%
Property J - Whakatāne, 1400ha, WT river scheme and Rangitāiki Drainage	$12,841	$14,252	$1,411	11%
Property K, Whakatāne RT River and Rangitāiki Drainage	$56,726	$59,291	$2,565	5%
Western Bay of Plenty District
Property L - Te Puke 50ha	$19,627	$20,620	$993	5%
Property M - Te Puke residential	$410	$421	$11	3%
Property N - Te Puke residential	$486	$500	$14	3%
Rotorua District
Property O - Residential	$746	$696	-$50	-7%
Property P - Hamurana Rural	$517	$481	-$36	-7%

3.3 Significant items that require further information/decisions

There are three items for consideration at future Council meetings. These are:

· Freshwater – potential savings from reset programme of work

· Ōhau Channel – possible costs not yet budgeted for

· Regional Park – Rotorua

Based on the direction provided on these topics, the draft AP will be updated and presented to Council in February 2025 for the next step of the process.

3.4 Inflation

The LTP inflation rate assumption of 2% for 2025/26 has been retained for the current version of the proposed budget for the draft Annual Plan. This assumption will be reviewed and updated following the release of the latest Business and Economic Research Limited (BERL) indicators in May 2025.

3.5 Public Transport

As advised at the workshop on 13 November 2024, further work has been completed on the Public Transport budgets and additional savings identified is represented in the estimates provided earlier in this report. Further, additional savings will be dependent on Council decisions still to be made on fare revenue, and expenditure options that will be discussed at future AP / PT workshops and meetings.

4. Next Steps

Staff will process the guidance received at this workshop and decisions made on the draft Annual Plan items at the December 2024 Council meeting. A revised version of the draft Annual Plan 2025/26 will be presented to Council in February 2025.

Attachments

Attachment 1 - Activity adjustments ⇩

Attachment 2 - Example Property Rating ⇩