The precarious financial position of Auckland Council has been laid bare in a gloomy pre-election report that signals big service cuts and the need for higher rates.

The report, from council chief executive Jim Stabback, mirrors reports that Auckland Transport is running out of money to run public transport at current levels and outgoing Mayor Phil Goff saying the Super City is facing hard times.

Stabback does not mince words in his pre-election report for council candidates and voters, saying "it is not a time for the faint-hearted".

The Covid-19 pandemic has created a $900m hole in the council's budget from falling revenue, coupled with rising costs from soaring inflation, bigger wage bills, higher fuel costs and ongoing disruption to supply chains, said the council boss.

Auckland Council chief executive Jim Stabback. Photo / File

Stabback also told Aucklanders to brace themselves for a cost blowout on the $4.4 billion City Rail Link and other major projects.

What's more, he said, shifting gears from what the council can afford to becoming a modern, liveable city will take "bold and courageous action in the next term of council".

"Without this there is a real risk that we cannot adequately respond to the challenges and opportunities we face."

Higher rates than the 3.5 per cent a year path in the 10-year budget and new funding tools like congestion charging and infrastructure levies are suggested to take the city forward and address issues like climate change

Under Goff, general and targeted rate increases (including this year's forecast increase) have risen by an average of 4.3 per cent a year over six years. The average household rates bill has risen from $2621 to $3293.

Stabback also hinted at significant spending and service cuts and ramping up asset sales. Goff has held the line over the sale of strategic assets, like shares in Ports of Auckland and Auckland Airport, but the issue is bound to come up again next term.

The report said efficiency savings of $2b over 11 years had been found, but there is a need to find $15m of permanent cost reductions in this year's budget, growing to $30m per year thereafter.

"Balancing the budget is an increasingly difficult task. Either the council considers further cost reductions … or finds new ways to increase revenue.

"Decisions that increase the council's funding capacity are often unpopular. However, they increase the council's ability to invest in Auckland to tackle the challenges we are facing," the report said.

Stabback has listed three key issues the next council needs to focus on - climate action, addressing inequity and funding for Aucklanders' needs.

On climate action, the report said Auckland is not on track to meet its ambitious goals of reducing greenhouse emissions by 2030 and 2050 without substantial additional funding and fundamental changes to the way Aucklanders live.

Diversity is one of Auckland's strengths, but the council has to up its game on delivering services and facilities for the rapidly changing cultural and demographic make-up across the city, the report said

It also identified a growing gap between rich and poor communities, which may require "some strong calls" to redirect money to disadvantaged areas in South and West Auckland.

This was highlighted in a recent Herald story that found AT is spending $55 million on two cycleways in the rich inner-city suburbs of Westmere, Pt Chevalier and Grey Lynn - more than what has been spent on cycleways in South Auckland since 2010.

Aucklanders are being told to brace for a cost blowout to the $4.4b City Rail Link. Photo / File

The report was not all doom and gloom.

After being in the job for less than two years, Stabback said Auckland is a fantastic place to live, and on track to become a city of more than two million people in the early 2030s.

"The good news is that if we tackle these challenges then we can make a meaningful difference in terms of maintaining and improving the quality of life for Aucklanders, our communities and our whānau."