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· Operating
Levy
Section 4.1 of the Museum's plan
(Attachment A) includes a concise summary of the levy funding decisions over
recent years.
“The level of operational
levy increase requested from contributing local authorities is 3.1%.
The funded depreciation has been
removed from the operating budget for the next 4 years and included as part
of the capital budget funded by the contributing local authorities.
The base operating deficit for the 2025/26 financial year is ($732,260) with
a net operating deficit, including self-generated income, of ($10,383).
In 2020 Christchurch City Council
advised that they were trying to achieve substantial savings across the
board, largely as a result of the Covid-19 pandemic, and requested a 0% levy
increase. The resulting levy increase for 2021/22 and 2022/23 was 0.29%
(effective 0% for CCC) and 0.65% (effective 0% for CCC) respectively. In
2023/24 the Board approved a budget increase of 22% for consultation. After
meeting with the Councils Consultative Committee, it was agreed that
depreciation for the next five years will be capitalised and added to the
redevelopment project funding in each contributing council’s long-term
plan. Payment of this portion of the ‘operating levy’ as capital
means Councils can borrow and thus lessen their load on rates. This resulted
in a 4.5% increase in operating levies for 2023/24.
Whilst it would be preferable for
the base operating result to be break-even, the Museum has agreed that we
will aim for a break-even scenario after the self-generated
revenue/expenditure.
The 2024/25 Annual Plan has been
used as the basis for the LTP projections for the Councils. Whilst we had
forecast levy increases of 5% increases for the next four years, with small
surpluses and deficits, the CCC has recommended levy increases that achieve
break-even. These increases are 5.4%, 3.1%, 3.7% and 7.8% (which are an
average of 5.0%).
The following assumptions have
been made in the draft 2025/26 operations budget.
· An operating
expense inflationary adjustment of 2.5% has been applied.
· Increases in
remuneration spend to support the required investment in IT upgrades as we
move towards the new Museum and to support the delivery of the New Visitor
Experience.
· A 3.0% cost of
living adjustment made for remuneration expenses
· Continued
deferral of Ravenscar House building depreciation
· Continued growth
of Quake City admissions
· An operating
levy increase of 3.1%.
Overhead and administration
expenses are allocated to each division of Collections and Research, Public
Engagement and Operations based on staff numbers.
Collection acquisitions which are
funded by way of bequests and the interest income on these bequests are shown
separately in the operational budget (Section 4.2).
Budgeted capital grants are
recognised as the redevelopment expenditure is incurred (Section 4.3).
A detailed breakdown of revenue,
expense and depreciation items is provided in the notes to the operational
and capital budgets (Section 4.4).”
 Section 6 of the Museum Plan provides a seven-year
forecast and outlines the key funding assumptions in the redevelopment
forecasts.
· Capital Levy
The Museum is seeking $25 million of additional capital
levies from Councils over the next four years:
· “We
have included the additional Local Government funding over 4 years, from
2025/26, on a 10%,30%,30%,30% basis (being $2,117,372 and $6,352,116 x 3 for
Christchurch City Council). Our Project Manager has advised that a commitment
to this funding will be required by January 2026 to enable placing the Stage
5 contract, maintaining the target programme and hence avoiding further
escalation in project cost, currently estimated to be in the order of $2.4m
per annum.”
The following table summarises the proposed funding
change for the remaining $86.6 million funding gap.
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