Council finances retain ‘stable’ position
Hay Shire Council remains in a positive financial position with its general and water funds in a satisfactory position and the sewer fund in such a strong position that charges do not need to increase in the next financial year.
“With the pool replacement issue, and the rising costs and requirements in the General Fund, this provides for the sustainability planning that Council needs to set the financial and capacity direction of the organisation for the next 20 years.
Following an extensive workshop and review of the current finances, Council has resolved to place the Draft Delivery and Operational Plan 2023/24 incorporating the Draft Revenue Policy and Draft 10-year Long Term Financial Plan (LTFP) on public exhibition.
Council considered what it wishes the organisation to look like in 20 years, recognising that there are no easy solutions, and some strategies can be a little misleading.
“When organisations say they are reviewing or reducing service levels it usually means staff numbers and often the associated plant and equipment will be lost,” General Manager David Webb said.
“Making it even more difficult for Council is that in such a dynamic world with ever-changing demands and requirements, the long-term plan really loses value after year five.
“Councils are not immune to cost of living pressures like other members of the community also face, with the financial sustainability of councils being an industry wide problem with a significant number of councils having to undertake action to ensure their long-term future.
“For example, the Emergency Services Levy (ESL) will increase in 2023/24 by $88,000, where Council’s increase in rate income from the IPART approved 3.7 per cent rate peg is $100,000.
“Fortunately for Council it is in a relatively stable financial position and has built up unrestricted cash reserves so it can stage any action and plan, as long as it is conducted in a structured way.
“However, current expenditure is not sustainable in the long-term.
“Council has resolved to take action to shore up its long-term financial sustainability by utilising a measured approached in constructing a draft budget on the model of Council achieving an operating surplus in General Fund during the life of the Plan.
“Based on Council’s current service levels, the desire and need to move into additional areas, a budget has been prepared that includes a proposal for a Special Rate Variation (SRV) of a 42 per cent rate increase over three years (ie 3 x 12.5 per cent increase over three years – 10 per cent increase plus assumed 2.5 per cent rate peg).
“The draft LTFP has this increase included over the period 2025/2026 to 2027/2028.
“A rate increase of 42 per cent over three years would make Council a more sustainable organisation, give flexibility in future service provision and mean that Council would be less reliant on external grant funding for assets renewals.
“The draft LTFP shows a small operating surplus by year 10, based on the additional income and assumed transformational savings in years five to 10.”
The proposed budget provides for an independent financial review to analyse Council’s long term financial requirements, including future revenue requirements from a suitably qualified professional to validate and support Councils position. Council said it would not seek additional rate income if not required.
