Council's predicted figures for the next four years show it in negative territory in its general fund despite a proposed increase of 8 per cent on two consecutive years in rates and annual charges.
Subscribe now for unlimited access.
or signup to continue reading
Looking at the plans for 20/21 council predicts a deficit of $8.2m in the general fund. The problem is council's projected expenses at almost $72m are in excess of its projected income at $63.6m.
As council itself said in its budget documents: "This shows that council will not generate sufficient income to meet its business operations for the same period."
There are three main funds, general, sewer and water that make up the consolidated fund and the positive financial figures in the sewer and water fund result in a $5.5m deficit in the consolidated fund.
Looking at the sum of the three funds in 2020-2021, council estimates $96m will be generated excluding capital grants and contributions but in the same year it estimates operating expenditure to be approximately $101.6m.
However council said that it has cash reserves in its consolidated fund to meet its obligations. Funds such as water and sewer collect more money than they need to operate and so these reserves are being used for the general fund "to ensure sufficient funds are available to fund major capital works over the next five years".
However using up cash reserves cannot be considered sustainable as ultimately there will come a time when the rainy day money has gone.
In addition council has highlighted a capital spend of $84m in the year 2020/21. Some of this spend will be financed by grants but it is unclear where the remainder will come from.
Looking forward the estimated figures for 2020/21 to 2023/24 do not predict council enters positive territory until 2024 for its consolidated fund.
However drilling down, the figures for the general fund show a bleaker picture with a deficit of $8.2m for 2020/21, deficit of $9.1m for 2021/22, a deficit of $6.7m for 2022/23 and a deficit of $1.2m in 2023/24.
And that is despite what appears to be a Special Rate Variation of 5 per cent in both 2022/23 and 2023/24. This would increase rates by 8 per cent approximately in each year.
Council has said its priority is that new debt should only be considered for new or significantly upgraded assets. Only a resolution of council can authorise the application for borrowings and acceptance of new debt.
Council also said that new debt should only be utilised on new or significantly upgraded asset projects and only after all other funding sources have been exhausted.
Council has placed its draft 2020-2021 operational plan and the 2020-2021 budget on exhibition and both documents are out for public comment. Rates will increase by the rate peg of 2.6 per cent while fees and charges have some increases around CPI as from July 1.
The draft, revised delivery program 2017-2021, the draft operational plan 2020-2021, including council's budget and draft fees and charges 2020-2021 and financial strategy are on public exhibition for 28 days with feedback on the documents to be considered at the council meeting on June 24.
Submissions on any of the draft documents can be made to the general manager via:
- Email: council@begavalley.nsw.gov.au
- Post Bega Valley ShireCouncil, PO Box 492, Bega, NSW, 2550
- Council's website: Have your say page
