Waikato District Council records a $26.7m operating surplus for 2025/26

Waikato District Council may have a CEO-sized hole in its ranks but the books are looking good.

The council had budgeted for a deficit of $5.8 million but ended 2025/26 with a $26.7 million operating surplus, a statement of comprehensive revenue in its annual report shows.

The report said the difference was primarily due to revenue "being $40m above budget, partly offset by operating expenditure being $7.6m above budget".

Rates revenue was nearly $5m above budget, while recognised vested and found assets came in $23.1m above budget.

The higher than budgeted rates revenue came down to stronger than expected growth in targeted rates, chief financial officer Paul Conder told the Waikato Times.

"When setting the 2026/27 general rates increase, Council partially reduced the planned increase to reflect savings achieved during the year while also addressing significant cost pressures, including inflation, higher capital costs, and rising fuel prices," he added.
"Council is careful to distinguish between one-off financial gains and ongoing savings when considering future rates increases."

Asset values were also bolstering the books, with the report showing they were $533.7m above budget at year end. Property, plant and equipment accounted for $514.7m of the variance.

That's mainly due to "updated valuations of council's infrastructure assets, particularly water supply, wastewater, stormwater, and roading networks", Conder said.

"These valuation increases reflect higher replacement costs across the infrastructure sector, including rising labour, materials, and contractor costs."

"In many cases, these increases have outpaced general inflation, resulting in a significant uplift in the recorded value of council's assets."

Another area doing better than expected was investments in council-controlled and associated entities at $9.2m above budget, which the report said was "largely due to a higher-than anticipated valuation of Waikato Regional Airport Limited".

According to the report's funding impact statement, which excludes non-cash transactions including asset write-offs, asset revaluations and vested assets, total operating funding surplus came in at $30.2m compared to a budgeted surplus of $29.1m.

"Total operating funding was $1.1m above budget, largely due to growth in targeted rates revenue and rates penalty income. Operating expenditure was $244k above budget, primarily due to increased payments to suppliers associated with higher activity levels during the year," the report read.

"Capital funding sources were $51.3m below budget, primarily due to lower borrowing requirements resulting from reduced capital expenditure delivery during the year."

In June, the council confirmed a 3.79% average rates increase for 2026/27, staying within central Government's 2-4% rates cap.

The report also detailed the transfer of $1.1b in council water and wastewater assets to IAWAI, which commenced on July 1.

Conder confirmed the transition had no impact on council's financial response year ending June 30.

After the transfer, the council received a 36% ownership stake, 50% voting rights in the newly-founded CCO as well as $205m loan receivable.

The financial performance of the district's water and wastewater prior to transfer came to a $14 million surplus.