CONFIDENTIAL
(3)
3-
Income from rates can be more closely estimated
in advance than can expenditure which usually falls short of the estimate. Any shortfall of actual expenditure in 1971/72
under the estimate will give some leeway for increased expenditure in future years, apart from that derived from increasing rate collections and any change in fees.
(4)
The yield from rates will be artificially held down in the years 1971/72 and 1972/73 because the institution of control on rent increases has made it necessary to postpone
a general revaluation, although assessment of new premises
is continuing normally. Total yield is estimated at $332 million
in 1971/72 and $348 million in 1972/73 but 400 million in 1973/74
after revaluation. The yields in 1971/72 and 1972/73 are, therefore likely to be some $30 million lower than on the
basis of a revaluation. This would mean that a rate calculated
as proposed in paragraph (1) would be at a higher percentage
figure than it would otherwise have been in order to produce
the same financial yield for the Council; and the Council would receive a substantial windfall from 1973/74 after revaluation. It is proposed, therefore, that the original rate should be calculated on a total rate yield in 1971/72 of $360 million, rather than $332 million, and that a once for all grant be made in 1972/73 to offset the lower actual yield in that year. This would be about $10 million on present indications.
(5) In addition, for presentational reasons, it would be desirable to start the Urban Council off on its first
financial year under these new arrangements with a once for all grant of up to $20 million, to be spent as it pleases either on recurrent or capital items. The actual amount of this grant would be the subject of discussion with the Urban Council.
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