Whakatāne District Council has found another $711,000 in savings for next financial year’s budget, which will be put toward paying off its $22.2 million operating deficit.

The council was divided three ways at Thursday’s strategy and policy committee at which it was updated on progress made on the Annual Plan 2026-2027 budget, since March 5.

Mayor Nandor Tanczos and deputy mayor Julie Jukes wanted the savings, which equated to 0.9 percent of the council’s annual rates revenue, placed in the contingency fund as recommended by staff.

This would add to the $560,000 – equivalent to 0.7 percent rates revenue – the committee decided to place into the contingency fund in March.

This would act as a buffer to manage expected inflationary costs due to the fuel crisis instigated by the war in Iran, with the understanding that at the end of the 2026-2027 financial year any unused contingency will be used to help reduce the council’s operating deficit.

Senior strategic policy analyst Elliot Fenton told elected members that the contingency fund was already under pressure due to the ongoing energy crisis.

“The pressure associated with those costs would continue even if the war were to end tomorrow, just because of the lag on prices, as well as ongoing anticipated increases in cost. We haven’t seen the bulk of these yet,” Fenton said.

“With these costs, that we know are going to hit us, I think it is prudent to have a contingency fund,” Jukes said.

She agreed the operating deficit needed to be reduced as quickly as possible.

“In particular, before rates capping hits us.”

Tanczos and Jukes were defeated in voting for this option.

They then voted with most of the councillors for what they considered was the second-best option – putting the money toward reducing council debt immediately.

“The sooner we can lower the operating deficit, it will have a longer-term benefit for the ratepayer,” councillor Lesley Immink said.

This passed with a majority, with only councillors Andrew Iles, Malcolm Whitaker and Gavin Dennis voting against the motion, seeking instead to put the savings toward reducing the upcoming average rates increase of 9.4 percent, to 8.5 percent.

“I think if there is any way this council can help alleviate some of the pain for our households we should,” Iles said.

Tanczos said although he had sympathy for the sentiment of councillors wanting to shave something off the rates increase, his concern was that it was “a bit of a slight of hand” for the community.

“We give them a dollar with one hand and take two out of their pocket with the other hand. The impact of instant rates relief now is going to be a bigger rates burden in the future.”

The savings were identified as a $500,000 reduction in solid waste operating costs after review by new waste manager, increased lease revenue from strategic property following rent reviews, and debt servicing savings due to timing of capital projects.

The report also said the council required two new staff positions to support the transition to an internal business unit for three waters, as required by the Government’s Local Water Done Well reform. These positions would be loan funded to have minimal effect on rates.

Despite this, the number of full-time equivalent staff required in the annual plan compared to those forecast in 2024’s long-term plan for this year has been reduced by just over 14 staff members.

Potential further reductions to targeted rates for kerbside recycling could be made through using a portion of the waste disposal levy funding received from the Ministry for the Environment for waste reduction activities.

Deliberations on this are scheduled for a meeting on June 11.

The report identified two projects that may require additional capital expenditure not currently in the budget.

These included a $750,000 Whakatāne Airport hangar development that will be presented to the council at an upcoming workshop, subject to an approved business case.

Funding would use $378,000 remaining in the 2025-2026 land development budget and require an additional $372,000 loan-funded provision.

The other was the Ōtuawhaki Wharf replacement for which a feasibility report was pending. A $900,000 provisional funding placeholder was recommended to recognise the potential capital requirement and enable planning.