Otago Regional Council says it cannot keep dipping into its financial reserves so ratepayers may face a 73 percent increase to their general rates bills.
During a meeting in Oamaru on Wednesday, the council voted to sign off supporting documents for its draft long-term plan ahead of consultation next month.
As part of the plan, the council said it would face a significant financial challenge over the next 10 years that needed a clear and prudent approach.
Last year, the council avoided a general rates increase during the height of the pandemic by using some of its financial reserves.
"The problem is that we can't keep using our reserves to subsidise our operational work - we need a sustainable and enduring source of funding," the long-term plan states.
"We've looked at other funding sources to reduce the rates requirement, including increased dividends from our investments, using reserves, and using external debt, which we haven't historically done.
"Despite this, a significant increase in rates is still required in year 1 to meet the immediate increase in operating expenditure so that we have a balanced budget."
Its preferred rates option is aimed at increasing total rates so it can sustainably fund its operational spending.
This option is expected to increase general rate bills on average from $107 to $186 for the first year with smaller increases for the second and third years.
"This ensures funding sources are increased to the sustainable level required by the time we fully review this Long-Term Plan in three years and it doesn't continue into future LTPs."
Deputy chair Michael Laws said it represented a massive percentage increase.
"Wouldn't mind betting that this might just be the largest percentage rate rise in a year that has ever happened in local government," Laws said.
"Sounds horrendous and in some ways it is. The first cause is our own past mismanagement which we cannot shrug from. The ORC didn't do its job in the past and is running to catch up and spending a large sum of money to do things that we have been properly called on.
"But the second is because we are now essentially, like all regional councils in New Zealand, at the behest of central government dictate and directive.
"And I fear - and I need to express that fear to this table - that that may become the new norm where regional councils and indeed territorial authorities have less and less control of their organisations and of their communities, and that it is already happening, I anticipate, with the Three Waters reform - which has so many unanswered questions but [it] may strip from many territorial authorities their reason for being."
He expected ratepayers would have questions and want answers.
"This is a huge rate rise in percentage terms and our community has every right to want to know why, and we have got to be honest and upfront, open and transparent with the rationale and the reasons for that occurring."
Promise to deliver
Councillor Kevin Malcolm said the council needed to ensure it delivered on what it promised.
"We are talking big numbers but we are going to deliver and that will be the key metric that will be measured at the end of the day so we talk about prudence, fairness, value for money and transparency," Malcolm said.
Councillor Marian Hobbs said the rates increase would help the council tackle many of the issues facing the community.
"I also want to make very clear that our 'to do' list is huge and we've had to delay some work that I'd like to have seen us go on with and one of them is, of course, the air plan.
"We're governed by national policy statements and national environment standards, and always have been since the beginning of the Resource Management Act."
It was not new for central government to set standards, she said.
Councillor Bryan Scott acknowledged that the additional funding sourced from increasing rates came with more responsibility and expectations.
"With that comes the responsibility to actually achieve some real outcomes on the ground," Scott said.
"As an organisation, ideally we move away from a focus on providing good and diligent reports to actually getting outcomes on the ground so a reduction in rabbits, an improvement in water quality in our streams. That is what our communities expect of this additional expenditure."