Auckland Council’s $295 million budget hole has soared from $295 million to $325m plus an extra $50 required for the storm response.

This could lead to rates increase of more than 20 per cent, Mayor Wayne Brown warned today.

The bad news was delivered to councillors by group chief financial officer Peter Gudsell at a closed-door workshop this morning.

The council’s debt, higher interest rates and inflation and the fact the council took one-off funding to plug last year’s shortfall are behind the shortfall, he said.

“This is an increase of $4.5m per week,” he said in a statement.

Auckland Mayor Wayne Brown. Photo / Dean Purcell

“Enough is enough. We must get serious about councils’ financial position. I did not create this hole, but I am determined that the council fix it, so it doesn’t just keep growing.

“Unless we can set Auckland Council on a path of financial sustainability and reduce our debt, then this gaping hole will only get bigger in the years to come,” he said.

Brown said to cover the budget shortfall with rates alone would require an average rate increase of 22.5 per cent.

The current proposed general rates rise is 7 per cent, but with rating changes, it equates to a 4.6 per cent rate rise for households.

But with a late addition to increase spending by $20m on a “storm respond fund”, this would increase rates by a further 1 per cent, to 5.6 per cent for households.

This year’s budget was already the most challenging in the 13 years of the Super City before today’s announcement - containing difficult and unpopular choices to plug the budget shortfall.

Brown has proposed a mix of measures to produce a balanced budget, including cutting unnecessary and inefficient spending, demanding better performance from council organisations, reducing debt servicing costs by selling the airport shares, increasing rates and potentially borrowing up to $75m.

There is a proposal on the table to sell Auckland Council's shares in Auckland Airport. Photo / Supplied

The council shares in Auckland Airport are currently valued at $2.2 billion.

Among the most contentious proposals are plans to cut regional, community and social services by $20m and regional contestable grants by $3m in the areas of arts, culture and events.

It is proposed to cut funding for things like Music in Parks, CultureFest and Botanic Garden events, $2 million to Citizens Advice Bureau offices in Auckland and stop funding for homelessness initiatives. Local Boards are also in line for a $16m cut in funding local activities.

Auckland Mayor Wayne Brown has proposed cutting funding to the Citizens Advice Bureau. Photo / File

Brown said all of these have their place as just relying on rates rises is unrealistic in this time of tight financial pressure on ratepayers, and using debt is what got us into this place.

“The council will meet to solve this problem over the next couple of weeks. Councillors need to be part of a balanced solution that doesn’t involve just hiking rates or adding to our debt mountain.

“It is time to take this seriously if we want to secure the sustainability of the core services and infrastructure expected by Aucklanders – like flood mitigation. We need to get this done so we can focus on the things I promised to fix.”

The final Mayoral Proposal for Annual Budget 2023/24 will be released at the end of this month.