The additional rate income would help fund the services and projects identified by the community in the community's long term strategic plan, Great Lakes 2030 and the associated community consultation. A successful rate variation proposal would also ensure that Council remains financially sound in the long term.
IPART annually sets a percentage limit by which councils may increase the total income they receive from ordinary rates. The income Council is currently raising through ordinary rates isn't sufficient to maintain existing services and facilities, or provide new and improved facilities that the community has identified in Great Lakes 2030.
What was IPART's determination of Council's Special Rate Variation application?
The Independent Pricing and Regulatory Tribunal (IPART) announced the result of Great Lakes Council's special rate variation application on Friday 10 June 2011. Council has been granted an increase of 8% for three years which includes the rate peg limit of 2.8% set by IPART for all NSW councils. This provides Council with a 5.2% increase in rate income above the rate peg limit. Council had applied for a variation over six years being 20% in year one followed by 3 years of 8% and two years of 6%.
Approval for continuation of the environmental levy which expires in 2014/15 was not granted, and Council will now have to reapply to IPART to continue this funding beyond 2014.
If you would like to learn more about the determination, please refer to IPART's media release, executive summary and full report on the determination.
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How will Council use the extra rate income?
Additional revenue provided by the rate increase will fund the following community services.
Existing services will be maintained and items that were proposed to be cut such as library books, Tuncurry swimming pool and parks maintenance will be reinstated in 2011-12.
Asset maintenance will be increased on roads and bridges for a three year period with an additional $340,000 going into the asset network in 2011/12, $500,000 in 2012/13 and $850,000 in 2013/14. Priority works will be identified with reference to the asset management plans and community need.
Borrowings to fund road maintenance will be reduced, leading to a significant long term savings by changing the current unsustainable funding strategy. We will reduce the $2.3 million currently borrowed for urban road renewal by 10% per annum. The program of works will be maintained but be funded from revenue instead of debt. The reduction in loan repayments and interest over the long-term is critical to improving Council's future financial position.
Additional funding will be provided for building maintenance of $125,000 in 2012/13 and $100,000 in 2013/14. Some of this funding will be utilised to improve the effectiveness and efficiency of the use of energy and water in Council's main buildings and to off-set the impact of significant utility price increases.
$50,000 will reintroduce the community grants and donations program and to provide contributions to local surf clubs for specific capital projects from 2012/2013.
Jimmys Beach sand renourishment emergency reserve will be re-established - this is in addition to the significant expenditure of $300,000 per annum to fund the sand renourishment program each year;
A comprehensive organisation-wide service level review will be undertaken aimed at improving service delivery to the community and demonstrating value for money into the future. The review will provide Council and the community with solid data on which to discuss the value of various services to the community, to identify those most valued and to determine if the right services are being delivered to the community at the right cost. This review will commence in 2011/12.
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What programs and projects are not funded?
IPART's determination does not provide Council with the funds to provide all of the items contained in its special rate variation application. The majority of programs and projects identified by the community as part of Great Lakes 2030 will remain unfunded. Some of these include;
- provision of a sustainable asset maintenance program in all areas including parks, buildings, roads & bridges
- urban and rural road construction
- Memorial Drive boardwalk (Forster)
- post by-pass town improvements (Bulahdelah)
- swimming pool operation (Nabiac)
- Myall Street footpath (Tea Gardens)
Council will continue to seek appropriate government funding to match ratepayer funds to assist in delivering key projects.
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What does the determination mean for the future financial position of Council?
In the short term, the approved variation enables Council to provide the works and services outlined above and achieve a small budget surplus. This is desirable in that it will improve Council's working funds, providing a level of funds to be held as a buffer for unforseen or emergency expenditure.
The longer term budget forecast sees Council with a budget deficit in 2016/17 of $405,000 growing to a significant deficit of $1,980,000 by 2020/21.