Balancing the books is a little like ensuring we don’t buy our groceries using our mortgage. We want the everyday costs of running our great river city to be paid for by our everyday revenues – instead of borrowing for them.
Everyday costs are what we need to pay to deliver the services we provide. These include keeping clean drinking water flowing through your tap, maintaining our streets and footpaths and lots more. It costs about $380 million every year to deliver these services.
We get everyday revenues from rates, fees when people receive a service like a building consent or when they visit a facility like the zoo.
If everyday revenues aren’t enough to cover everyday costs, it means we need to borrow money to do so. Using debt to pay for everyday costs means future generations of Hamiltonians will be paying for services that residents are receiving now.
Debt should only be used to pay for things that will be around for a long time, like new roads and water pipes – this means the repayments are shared across generations.
As well as complying with the financial reporting regulations that all councils around the country are required to follow, we use a balancing the books measure that is more relevant to our growing city. Our measure excludes capital revenue (such as Waka Kotahi subsidies) from the equation, as the purpose of that revenue is to build assets, not fund our everyday expenses. By separating the types of revenue, the city can maintain a clearer financial picture and ensure that capital revenue is used for its intended purpose.