Typically councils operate while in debt – but how much debt is too much?

If we read the last financial statements provided by our Councils (2014/2015 end of year debt: $144.4m for WDC alone) we notice that one item seems to be missing from the report: internal debt.

For those who didn't know, some Councils use money from other accounts (internal accounts) to pay for projects or other items. If this money is not accounted or paid back to that account this action could be classified as mis-appropriating funds. That’s a very serious situation to be in.

The current debt level of the Whangarei District Council is said to be approximately $160million, and the internal debt has been found to be over $50million. This means Whangarei has a total debt level of over $200million, which equates to $2100 per person or $5400 per rateable property. It means we now have the worst debt per rateable property than any other district.

As stated in previous blogs, we know that the typical residential property pays around $1700 for rates per year, which means our commercial properties are covering most of this debt. However our Councils keep spending, and will be asking us for further money this year with rates increases.

Our Council knows it must pay this internal debt back shortly, and yet the only solution they see is to raise rates more, yet they don't slow spending.

As a community we need our Councils to be honest with us, and if Whangarei is this bad, how bad are the other regions? What is Government going to do about it? Will Whangarei go into a commissioner situation like Kaipara did? You can read some news reports examining concerns over the council's debt here. 

Remember, it's a voting year - and you become empowered to making some changes just by filling out a form on October 8.