Press Release – Dunedin City Council
The Dunedin City Council is up to the challenge of continued financial belt-tightening, Dunedin Mayor Dave Cull says.
Financial Discipline at the Forefront
Dunedin (Thursday, 22 November 2012) – The Dunedin City Council is up to the challenge of continued financial belt-tightening, Dunedin Mayor Dave Cull says.
This week Standard and Poor’s (S & P) confirmed the DCC group credit rating at AA long term and A-1+ in the short term and has put Dunedin on negative credit watch.
This is not a downgrade, but the agency has made it clear the DCC needs to follow through with its tough financial targets.
“This decision has not come as a surprise, given Council debt levels, but it ensures we are even more firmly focused on achieving or improving the forecasts in our Long term Plan (LTP),” Mr Cull says.
In budget terms, the DCC has limited room to manoeuvre and this is reinforced in the LTP, which includes clear limits on borrowing.
The agency acknowledges the DCC’s LTP provides a framework to return the DCC to a more comfortable financial position. However, the agency wants further evidence the DCC is committed to working within the framework.
The challenge of servicing debt and maintaining services within rate rise limits of 4% in the coming year and 3% the year after is already recognised. Through cost-cutting measures and reduced capital spending the DCC is already addressing the issues identified by S & P.
The revised outlook is not expected to increase the Council’s borrowing costs.
Chief Executive Paul Orders says “I am confident staff will bring forward a draft budget for 2013-14 within the limits contained within the Long Term Plan. This will be based on the delivery of significant savings and operational efficiencies.
“Council will need to work within the parameters of a constrained financial strategy during the forthcoming annual plan deliberations.”
In its review, the agency cites the Council’s high debt burden and the challenge of guaranteeing sufficient funding (from all sources) to service that debt and at the same time provide sufficient operating cashflow. It also mentions the volatility of Council Controlled Organisations’ (CCOs) income from dividends.
Mr Cull says he is confident the DCC can meet its LTP targets. Recent governance changes mean CCOs are now more accountable.