Council’s General Manager Shane Burns has said that the preparation of the Draft 2012/13 Budget has been one of the most difficult tasks in his time in Local Government.
Armidale Dumaresq Council’s Draft 2012/13 Budget was adopted for public exhibition by Council at an extraordinary meeting held on Monday, May 14.
The draft budget is projecting to deliver a $490,000 deficit consolidated operating result, including depreciation.
“This is particularly the case for the General Fund component of the budget, where a $1.6 million deficit is predicted, demonstrating Council’s inability to fully fund the depreciation expense associated with the half billion dollar General Fund asset base,” said Mr Burns.
“Water and Sewer Funds remain financially healthy and both are planned to run surpluses which, on a consolidated basis, somewhat hides the depreciation problem in the General Fund.”
Mr Burns stated that, while Council receives around $11 million in General Rates, with a General Fund depreciation expense of $7.4 million and ratepayers’ expectations of the delivery of many services, the ability to fund all depreciation expenses has again not been achievable.
The inability to fund depreciation means that assets are gradually being run down, which is unsustainable and particularly concerning in the long term.
“The large majority of Councils in NSW are confronted by this situation and, without increased funding from higher levels of Government, or increased rates, the situation will continue to get worse. This will have significant implications for the future of the community,” said Mr Burns.
“This year, as is the case in previous years, we have seen expenses increasing significantly more than incoming revenue, which is restricted due to rate pegging. A few expenditure increase examples are: $160,000 for the Local Government Election; a 19 per cent increase allowance in electricity charges; increases due to the carbon tax; an average four per cent increase for salaries and wages; a five per cent increase for materials and contracts; and a 30 per cent increase for insurances. All these increased expenses add up to around $900,000 with only $450,000 in revenue from general rate increases to offset this increased expenditure.
To achieve a balanced cash position in the General Fund, Council had to delete some capital projects and take out some discretionary expenditure in community funding.
Council’s budget reports are available on Council’s website www.armidale.nsw.gov.au.
The public submissions period will close on June 18.
