Budget faces $151 million funding gap
Council faces an ‘emerging financial sustainability issue’ which means it must consider raising rates, a budget document reveals.
The document states that there is a $151 million funding gap for infrastructure, assets and other works over the next 10 years. COVID-19 placed ‘significant pressure’ on council’s budget, costing $41 million.
On 30 April, councillors will review the annual budget as part of the 10-year long-term financial plan. Issues affecting council’s current budget include high inflation, an increase in the emergency services levy and a restriction on rate rises above a set ‘peg’. However, many councils are now requesting – and receiving – permission from regulator IPART to make a ‘special rate variation’. Willoughby Council has recently submitted a case for a 15 per cent rise.
Under two proposals which councillors will consider, a 7.7 per cent rate rise is the scenario which will allow council an additional $14 million to meet its funding requirements.
The budget document makes clear that under the status quo, ‘there are flags of an emerging financial sustainability issue, especially regarding asset renewal and operating performance’.
“The operating result is weak, moving from small surpluses to deficits in years where larger projects occur.”
A council spokesperson said: “Should council choose to explore (the rate rise) option, further engagement would be undertaken with the community.”
There have been a series of ‘cost- shifting’ decisions by the State Government which are creating unexpected outlays for councils in NSW. Most recently, councils were told they would have to fund beach water quality testing – to the tune of $198,800 for Northern Beaches. This is in addition to the removal of a subsidy for the emergency services levy (ESL), which creates a $3.1 million hole in council’s budget. Council pays the highest ESL in the state, $9.3 million, because of the vast bushfire prone areas and higher relative land values, a spokesperson said.
“The services funded by the ESL are State Government services – these costs shouldn’t be pushed down to local government,” she added.
Graffiti has also become a huge cost for the council, with a $500,000 yearly bill for removal from council assets.