For years TCC management have cultivated a philosophy that attempts to justify previous large rates increases of about 60% in four years, the reason: 'Tauranga's rates are low compared to other Councils”.
This prophecy feed to TCC staff and Councillors doesn't stack up. The unavoidable and more important reason that is being kept secret, the 'REAL” reason for rate increases is that TCC 'MUST increase rates” to keep ahead of the mushrooming debt, this is made a lot worse because non-rate income has dropped so much (2006 $129.8m, 2011 $50.4m) mainly reduced development consent fees received.
A compare(in millions) TCC income, debt and interest from 2001 to 2011 and beyond is as follows:
| 2001 | 2007 | 2011 |
2015(Projection) |
|
| Rates Revenue |
$46.4 |
$63.8(+38%) |
$90.0(+41%) |
#$250(+278%)? |
| Other Revenue |
$42.7 | $129.8(+204%) |
$50.4(-258%) |
$70(+39%) |
| Total Debt |
$54.6 | $170.9(+213%) | $399.0(+133%) | $800(+100%) |
| Total Interest |
$4.2 | $4.2 | $23.8 | $55 |
| Ratio: Debt/Income |
0.61x | 0.88x | 2.84x | 2.84x |
# This must increase to maintain the ratio, all other factors can not be changed.
Source: Audited TCC Annual Reports/Weekend Sun.
TCC borrowings means that in the next 3-4 years rates must increase by a vast amount or the important ratio of debt/income will exceed 2.5x. TCC have already borrowed or committed to the 2015 debt so the only option to bridge the gap is increase rates, the ratepayer will be sacrificed, it will hurt many ratepayers either way.
A Barnes, Tauranga.
1 comment
CREDIT RATING OF TCC
Posted on 07-01-2012 14:37 | By SCARLET PIMPINEL
Yes the ratio is important, if it goes above 2.5x then the interest rate that TCC pays on debt will also increase, that means rates will have to increase anyway, catch 22.
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