Hamilton City Council forecasts drop in revenue due to Covid-19

Hamilton City Council is forecasting a $33 million drop in revenue due to Covid-19.

Richard Briggs, the Hamilton City Council chief executive, said that the council’s initial modelling shows under a best-case scenario, with business back to normal by July, the financial impact will be significant.

Under a worst-case scenario, with business back to normal by October 2020, financial impacts, would be ‘crippling’, the statement said.

Either way, the impacts will likely see the council breaching its debt to revenue ratio limits – meaning it could not legally borrow more money to make up the shortfall and keep the city moving.

Mr Briggs said the council was already talking to Government about setting debt to revenue at a more appropriate level for high-growth councils.

Nor could the council balance its books until 2025/26 at the earliest. This is despite Hamilton City being in a much stronger position than many other councils.

“We can’t be hampered by legislation that is simply not fit-for-purpose,” Mr Briggs said.

The council, which turns over $378 million each year, is forecasting a reduction in consent fees, engineering fees and development charges.

It estimates money paid to the council from community facilities like pools and libraries and visitor destinations, such as the Waikato Museum and Hamilton Zoo, could drop by as much as $5 million over two years.

The city will also be hit by a reduction in infrastructure operations and increased contract costs due to work shutdowns forced by the pandemic, Mr Briggs said.

He said the council would continue to actively manage its books and that other high-growth councils, including Tauranga, Wellington and Queenstown would face similar issues.

Tauranga has already estimated that revenue for the 2020/21 year will be down between $53 million and $77 million and says it may be forced to halve its capital works programme.

Mr Briggs said decisions about capital works had not yet been made for Hamilton.

Any decisions made by elected members would take the social, environmental, cultural and economic wellbeing of the city into account and that included the impact of a drop in revenue.

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