Agenda of Finance Advisory Committee Meeting

BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services 4.2

Staff Reports - Corporate and Community Services

Report No. 4.2 Draft Financial Sustainability Plan 2017/2018

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2017/1719

Theme: Corporate Management

Financial Services

Summary:

Council at its Ordinary meeting held on 9 May 2013 adopted a Financial Sustainability Plan (“FSP”) for the 2013/2014 financial period (refer Resolution 13-238).

This was the initial FSP developed and adopted by Council, and was prepared in accordance with part 3 of Council Resolution 13-148, to provide a strategic approach to the management of the Financial Sustainability of Council.

Resolution 13-148, adopted by the Strategic Planning Committee Resolution at its meeting held on 28 March 2013, provided the framework for the development the FSP.

The FSP provides a means for Council to communicate with the community on proposed reforms and actions to manage the financial sustainability of the organisation in the short, medium and long term.

This report has been prepared to allow the Finance Advisory Committee to consider the fifth version of the Financial Sustainability Plan for the 2017/2018 financial period.

RECOMMENDATION:

That the Finance Advisory Committee recommend to Council:

That Council adopt the Draft Financial Sustainability Plan 2017/2018 (#E2017/104429)

Attachments:

1 DRAFT Financial Sustainability Plan 2017 18, E2017/104429 , page 9⇩

Report

This report has been prepared to allow the Finance Advisory Committee to consider the draft “Financial Sustainability Plan 2017/2018” (“FSP 2017/2018”).

The FSP 2017/2018 is the fifth version of the FSP prepared for consideration by Council.

The first version of the FSP, FSP 2013/2014 was adopted by Council on 9 May 2013 via Resolution 13-238.

The second version of the FSP, FSP 2014/2015 was adopted by Council on 7 August 2014 via Resolution 14-326.

The third version of the FSP, FSP 2015/2016 was adopted by Council on 15 December 2015 via Resolution 15-606.

The fourth version of the FSP, FSP 2016/2017 was adopted by Council on 2 February 2017 via resolution 17-011.

During the course of the 2016/2017 financial year, work on the implementation of the actions detailed in the individual chapters of the 2016/2017 FSP was undertaken, with the outcomes progressively reported to the Finance Advisory Committee on a quarterly basis on 16 February 2017 and 18 May 2017, with the final report for the 2016/2017 financial year submitted to the FAC meeting held 17 August 2017.

The FSP 2017/2018 has been developed using a similar format to that of FSP 2016/2017 but has been amended to reflect the actions undertaken and the impact of the outcomes from these actions on the future strategic management of Council’s financial sustainability.

The relevant chapters in the FSP 2017/2018 have been prepared to capture the outcomes from the 2016/2017 financial year as well detail what is proposed for the 2017/2018 financial year.

The Action Plan is a summary of the actions detailed in the FSP for the following chapter areas:

· Expenditure Review

· Revenue Review

· Land Review and Property Development

· Strategic Procurement

· Policy and Decision Making

· Volunteerism

· Collaborations, Partnerships and Commercial Opportunities

· Asset Management

· Long Term Financial Planning

· Environmental Projects

· Continuous Improvement

· Financial Performance Indicators

The Action Plan will be completed and included in the 2017/2018 FSP when adopted by Council and will be developed from the Actions included in each Chapter. The Action Plan will then be reported to the FAC each quarter starting with the December quarter.

Financial Implications

The draft “Financial Sustainability Plan 2017/2018” forms part of the strategic approach adopted by Council in managing the short, medium long term sustainability of Council.

The Plan needs to be considered in context with the adopted annual Operational Plan, the Quarterly Budget Reviews and the Long Term Financial Plan when Council is considering the financial impacts of specific activities, projects and Services.

Part 2 of Resolution 13-148 requires the General Manager to prepare reports on specific elements of sustainability reform package detailed in the FSP, including any rationalisation of Council's property portfolio and the associated establishment of an Infrastructure Renewal Fund. The Infrastructure Renewal Fund was established by Council by Resolution 13-170 and the terms of operation for this Reserve were adopted by Council on 9 May 2013 via Resolution 13-239.

In accordance with Part 4 of Resolution 13-148 the General Manager will continue to prepare and submit progress reports on the implementation of the draft “Financial Sustainability Plan 2017/2018” to the Council's Finance Committee on a quarterly basis.

Statutory and Policy Compliance Implications

The FSP has been developed as a tool to assist Council in its ongoing obligations as defined in Chapter 3 (Principles for local government) of the Local Government Act 1993.

Section 8A of the Local Government 1993 provides that Council as part of its Guiding Principles consider the following:

(1) Exercise of functions generally

The following general principles apply to the exercise of functions by councils:

(a) Councils should provide strong and effective representation, leadership, planning and decision-making.

(b) Councils should carry out functions in a way that provides the best possible value for residents and ratepayers.

(c) Councils should plan strategically, using the integrated planning and reporting framework, for the provision of effective and efficient services and regulation to meet the diverse needs of the local community.

(d) Councils should apply the integrated planning and reporting framework in carrying out their functions so as to achieve desired outcomes and continuous improvements.

(e) Councils should work co-operatively with other councils and the State government to achieve desired outcomes for the local community.

(f) Councils should manage lands and other assets so that current and future local community needs can be met in an affordable way.

(g) Councils should work with others to secure appropriate services for local community needs.

(h) Councils should act fairly, ethically and without bias in the interests of the local community.

(i) Councils should be responsible employers and provide a consultative and supportive working environment for staff.

(2) Decision-making

The following principles apply to decision-making by councils (subject to any other applicable law):

(a) Councils should recognise diverse local community needs and interests.

(b) Councils should consider social justice principles.

(d) Councils should consider the principles of ecologically sustainable development.

(e) Council decision-making should be transparent and decision-makers are to be accountable for decisions and omissions.

(3) Community participation

Councils should actively engage with their local communities, through the use of the integrated planning and reporting framework and other measures.

BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services 4.3

Report No. 4.3 Unrestricted Cash and Reserves at 30 June 2017

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2017/1720

Theme: Corporate Management

Financial Services

Summary:

This report has been prepared to allow the Finance Advisory Committee to note the Reserve Balances as at 30 June 2017.

Council at its Ordinary Meeting held on 26 October 2017 adopted the 2016/2017 Financial Statements (Resolution: 17-449) that incorporate the results indicated in this report.

RECOMMENDATION:

1. That the Reserve Balances as outlined in Attachment 1 (#E2017/103622) at 30 June 2017 be noted by the Finance Advisory Committee.

2. That the Unrestricted Cash Balance of $1,145,200 as at 30 June 2017 be noted by the Finance Advisory Committee.

Attachments:

1 2016/2017 Reserves Schedule, E2017/103622 , page 49 ⇩

Report

This report has been prepared to allow the Finance Advisory Committee to note the Reserve Balances as at 30 June 2017 and the Unrestricted Cash Balance at 30 June 2017 as an indicator of Council’s liquidity position.

Council at its Ordinary Meeting held on 26 October 2017 adopted the 2016/2017 Financial Statements (Resolution 17-449) that incorporate the results indicated in this report.

Liquidity in terms of Council being able to fulfil its short term financial commitments is critical and an indicator in the short term of Council’s financial health. There is no set indicator that is absolutely used to identify the liquidity position of a Council, however there are the following indicators:

· Unrestricted Cash – this represents the total available cash and investments Council has, that is not restricted for any reason either by legislation, condition or Council resolution. This amount is determined at 30 June each year and disclosed at note 6(c) of Council’s annual Financial Statements. It is calculated by deducting from total cash and investments held the total amount of internal and external restrictions or reserves.

· Unrestricted Current Ratio – this ratio assesses the short term adequacy of working capital. It compares unrestricted current assets to unrestricted current liabilities. Any ratio that has at least $1.50 of unrestricted current assets to each $1 of unrestricted current liabilities is generally considered satisfactory. This indicator is determined at 30 June each year and disclosed at note 13(a) of Council’s annual Financial Statements. This indicator is usually provided on a consolidated basis ie amalgamating all of Council’s General, Water and Sewerage Funds. However since the 2009/2010 financial year, Councils are now required to calculate this ratio and other ratios by Fund for additional disclosure as outlined in note 13(b) of Council’s annual Financial Statements. On a consolidated basis at 30 June 2017, Council had $3.20 of unrestricted current assets to each $1 of unrestricted current liabilities.

· Cash Expense Cover Ratio – this indicator commenced disclosure from the 2013/2014 financial year that is disclosed at note 13(a) of Council’s annual Financial Statements. It measures the number of months Council would be able to pay its immediate expenses without additional cash inflow. The benchmark for this ratio is 3 months and at 30 June 2017, Council was at 14.32 months.

Unrestricted Cash Balance

The Unrestricted Cash Balance disclosed in the Financial Statements indicates that as at 30 June 2017 an amount of $1,145,211, the same amount that was available in 2015/2016. This means that all cash and investments held by Council of $78,839,117 as at 30 June 2017 were restricted for a purpose by legislation, funding condition or Council resolution except for $1,145,211.

Council at its Ordinary Meeting held on 8 August 2013 adopted an Unrestricted Cash Balance target of $1,000,000 for the General Fund as a measure of its short term unrestricted liquidity from 1 July 2013 (Resolution: 13-378). Council’s other funds being Water and Sewerage will always have a $0 (Nil) Unrestricted Cash Balance given the legislative requirements of water and sewerage revenues which requires and unexpended funds to be reserved as an external restriction. Any reported Unrestricted Cash Balance will always relate to the General Fund.

It was a pleasing outcome that Council was able to maintain an Unrestricted Cash Balance in the General Fund at 30 June 2017 that exceeded its adopted target of $1,000,000.

Reserves

Detailed at Attachment 1 is a listing of Council’s cash funded reserves. Contained in this listing is the detail of and value as at 30 June 2017 of the various reserve types. Reserve types are broken down into the following components:

· External Restrictions – these reserves relate to unexpended grants, developer contributions, bonds and deposits, unexpended loans (non-General Fund), Crown reserves, domestic waste management, water, sewerage and Roads and Maritime Services (RMS) contributions unexpended.

· Internal restrictions – these are reserves set by Council for specific purposes that are not required to be restricted for external reasons ie legislation, condition etc. These reserves though are generally created to isolate self-financing activities and their accumulated funds or if Council by resolution wants funds specifically set aside. Examples of internal restrictions are also listed in Attachment 1 and also in note 6(c) to Council’s annual Financial Statements.

In summary, as at 30 June 2017 detailed in Note 6(c) to the annual Financial Statements are the following values relating to reserves restricted against available cash and investments:

· Total available cash and investments $78,839,117

· Total external restrictions (reserves) $56,849,499

· Total internal restrictions (reserves) $20,844,407

· Total unrestricted cash and investments $1,145,211.

It is appropriate that Council consider its reserves which are restricted against available cash and investments and resolve by resolution to adopt their description and value. By default this occurred when Council adopted the 2016/2017 Financial Statements at its Ordinary Meeting held on 26 October 2017. Council further reviews the position of held reserves through setting the annual budget and subsequent reviews of the budget at each quarterly budget review.

Financial Implications

There are no direct financial implications associated with this report. the report is identifying to the Finance Advisory Committee the overall liquidity and reserves position of Council at 30 June 2017 for information.

Statutory and Policy Compliance Implications

The requirement of Council to restrict aspects of its available cash and investments follows from the requirement to maintain appropriate accounting records to verify the expenditure of funds and recognition of funds required to be detailed as unexpended. This is a canvassed by the Local Government Code of Accounting Practice and Financial Reporting (as amended) upon which Council must adhere to as outlined Section 413(3) of the Local Government Act 1993 and Regulation 214 of the Local Government (General) Regulation 2005.

Section 409 of the Local Government Act 1993 and Regulation 205 of the Local Government (General) Regulation also outline conditions on the use of funds received by Council.

BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services 4.4

Report No. 4.4 Quarterly Update - Implementation of Special Rate Variation (SRV)

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2017/1731

Theme: Corporate Management

Financial Services

Summary:

Council at its Ordinary Meeting held on 2 February 2017 resolved to apply for a Special Rate Variation (SRV) of 7.50% per annum for four years commencing from the 2017/2018 financial year (Resolution 17-020 part 5).

Following approval of Council’s SRV by the Independent Pricing and Regulatory Tribunal (IPART) received on 9 May 2017, Council resolved to implement the SRV at its Ordinary Meeting held 22 June 2017 (Resolution 17-268 part 1).

Council at the same Ordinary Meeting held on 22 June 2017 resolved (Resolution 17-222 part 2) to incorporate reporting on the Special Rate Variation into the development of the 2017/2018 Financial Sustainability Plan and quarterly updates to Council through the Finance Advisory Committee on the implementation of the adopted Financial Sustainability Plan.

The purpose of this report is to provide the Finance Advisory Committee with the first quarterly update on implementation of the SRV and expenditure up to 30 September 2017.

RECOMMENDATION:

That the Finance Advisory Committee note the quarterly update on the Special Rate Variation implementation as at 30 September 2017.

Attachments:

1 2017-2018 Special Rate Variation Expenditure at 30 September 2017, E2017/104211 , page 56 ⇩

Report

Council at its Ordinary Meeting held 2 February 2017 resolved to apply for a Special Rate Variation (SRV) as follows:

Resolution 17-020 part 5

Lodge a Section 508A permanent Special Rate Variation application to the Independent Pricing and Regulatory Tribunal, for increases to the ordinary rate income (general revenue) of 7.5% (including rate peg) in 2017/18, 7.5% (including rate peg) in 2018/19, 7.5% (including rate peg) in 2019/20 and 7.5% (including rate peg) in 2020/21.

After lodging the Special Rate Variation application with the Independent Pricing and Regulatory Tribunal (IPART), Council received approval to increase its ordinary rate income as per resolution 17-020. This approval was granted on 9 May 2017. Council resolved to implement the SRV through adoption of the 2017/2018 Operational Plan and Revenue Policy at its Ordinary Meeting held on 22 June 2017 (Resolution 17-268 part 1).

Council at its Ordinary Meeting held 22 June 2017 received Report 13.13 confirming the outcome of the SRV application and its subsequent approval. Council resolved resolution 17-222 as follows:

1. That Council note the determination from IPART in relation to its 2017/2018 Special Rate Application including the following conditions imposed by IPART on Council for the:-

a) use of the additional income derived from the special variation for the purposes of reducing its infrastructure backlog and improving financial sustainability; and

b) reporting on this use against the forecasts included in the Council’s application as part the Council’s annual report for each year from 2017-18 to 2026-27.

2. That Council adopt as a Policy Framework the use and reporting conditions imposed by IPART in the SRV determination and further incorporate reporting on the Special Rate Variation into the development of the 2017/2018 Financial Sustainability Plan and the quarterly updates to Council through the Finance Advisory Committee on the implementation of the adopted Financial Sustainability Plan.

3. That Council establish as a policy framework that funding for infrastructure renewal and maintenance from general revenue sources is not ever lower then the general revenue baseline indicator established in the 2016/2017 Budget.

4.That Council establish as a policy framework that any funds generated by the SRV that remain unexpended at the end of each financial year are to be restricted and held in a internal reserve, to be carried forward to subsequent financial year, for expenditure in accordance with the uses imposed in the SRV approval.

5. That Council incorporate the research of potential non resident revenue sources (if any) as part of the Revenue Review chapter in the development of the 2017/2018 Financial Sustainability Plan, and provide quarterly updates to Council through the Finance Advisory Committee.

6. That Council not proceed with the implementation of part 9 and part 11 of resolution 17-020.

The 2017/2018 Draft Financial Sustainability Plan subject to another report to this Meeting of the Finance Advisory Committee has been developed to incorporate future quarterly reporting on the SRV as outlined in Chapter 7 ‘Policy and Decision Making’.

This report is provided to the Finance Advisory Committee to advise on the implementation of the SRV and the current status of expenditure from 1 July 2017 to 30 June 2017.

The levy of Council’s annual rates and charges was completed in accordance with Resolution 17-268 prior to 31 July 2017 and this included applying the first tranche of the 7.5% ordinary rate increase for 2017/2018 and revised ordinary rating structure adopted by Council. The estimated yield from the SRV for 2017/2018 being the first year of the increase is $1,185,000.

Upon adoption of the 2017/2018 Budget Estimates, Council resolved to undertake the following program of capital and maintenance works including the additional SRV revenue and other funding as outlined in Attachment 1. During the course of the 2017/2018 financial year, there may be adjustments required to the expenditure budgets identified in the schedule of capital and maintenance works currently funded by the SRV revenue which will be presented to Council for approval via the Quarterly Budget Review process.

The expenditure program adopted for 2017/2018 financial year is consistent with Council’s SRV application and approval from IPART to use the funding to improve financial sustainability and reduce infrastructure backlog.

Financial Implications

There are no direct financial implications associated with this report. The table included at Attachment 1 provides information to the Finance Advisory Committee as to the expenditure of the Special Rate Variation Funds up to the first quarter of the 2017/2018 financial year.

Statutory and Policy Compliance Implications

Approval and conditions received from the Independent Pricing and Regulatory Tribunal (IPART) regarding the Byron Shire Council Special Rate Application 2017-2018 received 9 May 2017.

Council Resolution 17-268 and 17-222.

BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services 4.5

Report No. 4.5 Council Budget Review - 1 July 2017 to 30 September 2017

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2017/1736

Theme: Corporate Management

Financial Services

Summary:

This report is prepared to comply with Regulation 203 of the Local Government (General) Regulation 2005 and to inform Council and the Community of Council’s estimated financial position for the 2017/2018 financial year, reviewed as at 30 September 2017.

This report contains an overview of the proposed budget variations for the General Fund, Water Fund and Sewerage Fund. The specific details of these proposed variations are included in Attachment 1 and 2 for Council’s consideration and authorisation.

Attachment 3 contains the Integrated Planning and Reporting Framework (IP&R) Quarterly Budget Review Statement (QBRS) as outlined by the Division of Local Government in circular 10-32.

RECOMMENDATION:

That the Finance Advisory Committee recommend to Council:

1. That Council authorise the itemised budget variations as shown in Attachment 2 (#E2017/104035) which includes the following results in the 30 September 2017 Quarterly Review of the 2017/2018 Budget:

a) General Fund – $161,900 decrease to the Estimated Unrestricted Cash Result

b) General Fund - $1,651,500 increase in reserves

c) Water Fund - $110,000 decrease in reserves

d) Sewerage Fund - $15,000 decrease in reserves

2. That Council adopt the revised General Fund Estimated Unrestricted Cash Result of $940,600 for the 2017/2018 financial year as at 30 September 2017.

Attachments:

1 Budget Variations for General, Water and Sewerage Funds, E2017/104033 , page 67 ⇩

2 Itemised Listing of Budget Variations for General, Water and Sewerage Funds, E2017/104035 , page 137⇩

3 Integrated Planning and Reporting Framework (IP&R) required Quarterly Review Statement, E2017/104034 , page 147⇩

Report

Council adopted the 2017/2018 budget on 22 June 2017 via Resolution 17-268. It also considered and adopted the budget carryovers from the 2016/2017 financial year, to be incorporated into the 2017/2018 budget at its Ordinary Meeting held on 24 August 2017 via Resolution 17-322. Since that date, Council has reviewed the budget taking into consideration the 2016/2017 Financial Statement results and progress through the first quarter of the 2017/2018 financial year. This report considers the September 2017 Quarter Budget Review.

The details of the budget review for the Consolidated, General, Water and Sewer Funds are included in Attachment 1, with an itemised listing in Attachment 2. This aims to show the consolidated budget position of Council, as well as a breakdown by Fund and Principal Activity. The document in Attachment 1 is also effectively a publication outlining a review of the budget and is intended to provide Councillors with more detailed information to assist with decision making regarding Council’s finances.

Contained in the document at Attachment 1 is the following reporting hierarchy:

Consolidated Budget Cash Result

General Fund Cash Result Water Fund Cash Result Sewer Cash Result

Principal Activity Principal Activity Principal Activity

Operating Income Operating Expenditure Capital income Capital Expenditure

The pages within Attachment 1 are presented (from left to right) by showing the original budget as adopted by Council on 22 June 2017 plus the adopted carryover budgets from 2016/2017 followed by the resolutions between July and September and the revote (or adjustment for this review) and then the revised position projected for 30 June 2018 as at 30 September 2017.

On the far right of the Principal Activity, there is a column titled “Note”. If this is populated by a number, it means that there has been an adjustment in the quarterly review. This number then corresponds to the notes at the end of the Attachment 1 which provides an explanation of the variation.

There is also information detailing restricted assets (reserves) to show Council estimated balances as at 30 June 2018 for all Council’s reserves.

A summary of Capital Works is also included by Fund and Principal Activity.

Office of Local Government Budget Review Guidelines:-

The Office of Local Government on 10 December 2010 issued the new Quarterly Budget Review Guidelines via Circular 10-32, with the reporting requirements to apply from 1 July 2011. This report includes a Quarterly Budget Review Statement (refer Attachment 3) prepared by Council in accordance with the guidelines.

The Quarterly Budget Review Guidelines set a minimum standard of disclosure, with these standards being included in the Local Government Code of Accounting Practice and Financial Reporting as mandatory requirements for Council’s to address.

Since the introduction of the new planning and reporting framework for NSW Local Government, it is now a requirement for Councils to provide the following components when submitting a Quarterly Budget Review Statement (QBRS):-

· A signed statement by the Responsible Accounting Officer on Councils financial position at the end of the year based on the information in the QBRS

· Budget review income and expenses statement in one of the following formats:

o Consolidated

o By fund (e.g General, Water, Sewer)

o By function, activity, program etc to align with the management plan/operational plan

· Budget Review Capital Budget

· Budget Review Cash and Investments Position

· Budget Review Key performance indicators

· Budget Review Contracts and Other Expenses

The above components are included in Attachment 3:-

Income and Expenditure Budget Review Statement by Type – This shows Councils income and Expenditure by type. This has been split by Fund. Adjustments are shown, looking from left to right. These adjustments are commented on through the last 16 pages of Attachment 1.

Capital Budget Review Statement – This statement identifies in summary Council’s capital works program on a consolidated basis and then split by Fund. It also identifies how the capital works program is funded. As this is the first quarterly review for the reporting period, the Statement may not necessarily indicate the total progress achieved on the delivery of the capital works program.

Cash and Investments Budget Review Statement – This statement reconciles Council’s restricted funds (reserves) against available cash and investments. Council has attempted to indicate an actual position as at 30 September 2017 of each reserve to show a total cash position of reserves with any difference between that position and total cash and investments held as available cash and investments. It should be recognised that the figure is at a point in time and may vary greatly in future quarterly reviews pending on cash flow movements.

Key Performance Indicators (KPI’s) – At this stage, the KPI’s within this report are:-

o Debt Service Ratio - This assesses the impact of loan principal and interest repayments on the discretionary revenue of Council.

o Rates and Annual Charges Outstanding Ratio – This assesses the impact of uncollected rates and annual charges on Councils liquidity and the adequacy of recovery efforts

o Asset Renewals Ratio – This assesses the rate at which assets are being renewed relative to the rate at which they are depreciating.

These may be expanded in future to accommodate any additional KPIs that Council may adopt to use in the Long Term Financial Plan (LTFP.)

Contracts and Other Expenses - This report highlights any contracts Council entered into during the July to September quarter that are greater then $50,000.

CONSOLIDATED RESULT

The following table provides a summary of the overall Council budget on a consolidated basis inclusive of all Funds budget movements for the 2017/2018 financial year projected to 30 June 2018 but revised as at 30 September 2017.

2017/2018 Budget Review Statement as at 30 September 2017	Original Estimate (Including Carryovers) 1/7/2017	Adjustments to 30 Sept 2017 including Resolutions*	Proposed 30Sept 2017 Review Revotes	Revised Estimate 30/6/2018 at 30/9/2017
Operating Revenue	76,828,000	0	2,530,900	79,358,900
Operating Expenditure	79,542,600	155,000	3,072,500	82,770,100
Operating Result – Surplus/Deficit	(2,714,600)	(155,000)	(541,600)	(3,411,200)
Add: Capital Revenue	27,790,000	66,000	(1,897,700)	25,958,300
Change in Net Assets	25,075,400	(89,000)	(2,439,300)	22,547,100
Add: Non Cash Expenses	12,939,400	0	0	12,939,400
Add: Non-Operating Funds Employed	2,160,000	0	2,516,000	4,676,000
Subtract: Funds Deployed for Non-Operating Purposes	(64,587,000)	(400,000)	1,287,900	(63,699,100)
Cash Surplus/(Deficit)	(24,412,200)	(489,000)	1,364,600	(23,536,600)
Restricted Funds – Increase / (Decrease)	(24,419,500)	(439,000)	1,526,500	(23,332,000)
Forecast Result for the Year – Surplus/(Deficit) – Unrestricted Cash Result	7,300	(50,000)	(161,900)	(204,600)

GENERAL FUND

In terms of the General Fund projected Unrestricted Cash Result the following table provides a reconciliation of the estimated position as at 30 September 2016:

Opening Balance – 1 July 2017	$1,145,200
Plus original budget movement and carryovers	$7,300
Council Resolutions July – September Quarter	(50,000)
Recommendations within this Review – increase/(decrease)	($161,900)
Forecast Unrestricted Cash Result – Surplus/(Deficit) – 30 June 2018	($204,600)
Estimated Unrestricted Cash Result Closing Balance – 30 June 2018	$940,600

The General Fund financial position overall has decreased by $161,900 as a result of this budget review. The proposed budget changes are detailed in Attachment 1 and summarised further in this report below.

Council Resolutions

Resolution 17-269 for the Mullumbimby Hospital Acquisition in part 3 stated “That a budget of $50,000 be approved by the Council to fund the independent peer review and that any remaining funds be used for the forward planning process”. There was no suggested funding source for this resolution and at this point no funding source has been identified.

Budget Adjustments

The budget adjustments identified in Attachments 1 and 2 for the General Fund have been summarised by Budget Directorate in the following table:

Budget Directorate	Revenue Increase/ (Decrease) $	Expenditure Increase/ (Decrease) $	Accumulated Surplus (Working Funds) Increase/ (Decrease) $
General Manager	0	0	0
Corporate & Community Services	134,900	111,500	23,400
Infrastructure Services	3,721,300	3,847,200	(125,900)
Sustainable Environment & Economy	209,100	268,500	(59,400)
Total Budget Movements	4,065,300	4,227,200	(161,900)

Budget Adjustment Comments

Within each of the Budget Directorates of the General Fund, are a series of budget adjustments identified in detail at Attachment 1 and 2. More detailed notes on these are provided in Attachment 1 but in summary the major additional items included are summarised below by Directorate and are included in the overall budget adjustments table above:

Corporate and Community Services

· In the General Purpose Revenues Program an additional $42,400 in revenue has been recognised as the allocation for Council’s 2017/2018 Financial Assistance Grant is more than budgeted.

· In the Governance Services Program it is proposed to increase expenditure by $15,000 for grant management costs. This can be funded through the Grants Management reserve.

· In the Sandhills program, it is proposed to increase the budget for the installation of solar panels ($12,600). This has no net effect on the result as all movements are taken up through the Childrens’ Service reserve.

· In the Pubic Libraries program, it is proposed to increase the budget for the installation of solar panels ($60,000) and costs for concept plans for Brunswick Heads library ($5,300).

Infrastructure Services

· In the Projects & Commercial Development program, it is proposed to increase capital income due to the sale of land at Station Street Mullumbimby for $1,300,000. This can be transferred to the Property Development reserve.

· In the Local Roads and Drainage program, there are a number of adjustments outlined under Note 14 in the Budget Variations explanations section of Attachment 1. Further disclosure is included in the second page of Attachment 2 under the budget program heading Local Roads and Drainage.

· In the Roads and Maritime Services program (RMS) it is proposed to increase operating income and expenditure by $1,742,700 to account for Natural disaster works from June 2016 ($945,000) and March 2017 ($797,700).

· In the Open Space and Recreation program, operating expenditure increased by $21,600 due to a request for a budget for Shara Boulevard sportsfield maintenance of $60,000, reductions of $40,100 against various park and reserve maintenance budgets and a support service cost adjustment of $1,700. There are a number of capital expenditure adjustments outlined under Note 16 in the Budget Variations explanations section of Attachment 1. Further disclosure is included in the third page of Attachment 2 under the budget program heading Open Space & Recreation.

· In the Waste & Recycling program It is proposed to increase operating income by $182,100 due to the receipt of the Better Waste and Recycling grant ($74,500) and a grant for the enhancement of the Resource Recovery Centre ($107,600). It is proposed to increase operating expenditure by $245,000 for the Waste Management Strategy ($130,000) and the Waste Compliance program ($114,000). It is also proposed to make a support service adjustment of $2,500. It is proposed to allocate a budget of $1,216,000 for capital income due to the sale of land at Dingo Lane. This will be transferred to the Waste Management reserve.

· In the Cavanbah Centre program, it is proposed to decrease capital expenditure overall by $217,000 due to estimated grant revenues for projects such as AFL Barrier Netting and Grandstands and Aquatic Centre project as explained in Attachment 1 at Note 18.

· In the First Sun and Suffolk Beachfront Holiday Parks program, it is proposed to increase the budget by $20,000 at each site to continue painting for the year and $40,000 at First Sun for Western Beach access. All adjustments are through the Holiday Park reserve.

· In the Facilities Management program it is proposed to increase operating expenditure by $96,800. This is the excess that Council must pay relating to the flood damage from March 2017

Sustainable Environment and Economy

· In the Development and Certification program, it is proposed to increase income and expenditure by $13,000 to budget for the Information and Technology Service fee. This will fund the Process Improvement Officer. It is propose to add an additional $35,000 to the DA fees received.

· In the Planning Policy and Natural Environment Program, It is proposed to increase income and expenditure to accommodate the Byron Habitat Corridors grant ($64,600), an increase to the Employment Land Strategy ($20,000), an increase to Coastline Beach Scraping ($61,000 – to match grant funding) and an increase for the Integrated Weed management Strategy ($20,000).

· In the Environment & Compliance program it is proposed to increase the budget for licence plate recognition costs of $87,600. This can be funded through the Paid Parking reserve.

WATER FUND

After completion of the 2016/2017 Financial Statements the Water Fund as at 30 June 2017 has a capital works reserve of $4,953,000 and held $6,692,100 in section 64 developer contributions.

The estimated Water Fund reserve balances as at 30 June 2018, and forecast in this Quarter Budget Review, are derived as follows:

Capital Works Reserve

Opening Reserve Balance at 1 July 2017	$4,953,800
Plus original budget reserve movement	1,539,000
Less reserve funded carryovers from 2016/2017	(124,800)
Resolutions July - September Quarter – increase / (decrease)	0
September Quarterly Review Adjustments – increase / (decrease)	(40,000)
Forecast Reserve Movement for 2017/2018 – Increase / (Decrease)	1,374,200
Estimated Reserve Balance at 30 June 2018	$6,328,000

Section 64 Developer Contributions

Opening Reserve Balance at 1 July 2017	$6,692,100
Plus original budget reserve movement	(1,874,000)
Less reserve funded carryovers from 2016/2017	(2,645,300)
Resolutions July - September Quarter – increase / (decrease)	0
September Quarterly Review Adjustments – increase / (decrease)	(70,000)
Forecast Reserve Movement for 2017/2018 – Increase / (Decrease)	(4,589,300)
Estimated Reserve Balance at 30 June 2018	$2,102,800

Movements for Water Fund can be seen in Attachment 1 with a proposed estimated decrease to reserves (including S64 Contributions) overall of $110,000 from the 30 September 2017 Quarter Budget Review.

SEWERAGE FUND

After completion of the 2016/2017 Financial Statements the Sewer Fund as at 30 June 2017 has a capital works reserve of $7,372,800 and plant reserve of $827,800. It also held $9,583,600 in section 64 developer contributions.

Capital Works Reserve

Opening Reserve Balance at 1 July 2017	$7,372,800
Plus original budget reserve movement	(1,008,100)
Less reserve funded carryovers from 2016/2017	(102,200)
Resolutions July - September Quarter – increase / (decrease)	0
September Quarterly Review Adjustments – increase / (decrease)	24,000
Forecast Reserve Movement for 2017/2018 – Increase / (Decrease)	(1,086,300)
Estimated Reserve Balance at 30 June 2018	$6,286,500

Plant Reserve

Opening Reserve Balance at 1 July 2017	$827,800
Plus original budget reserve movement	0
Less reserve funded carryovers from 2016/2017	0
Resolutions July - September Quarter – increase / (decrease)	0
September Quarterly Review Adjustments – increase / (decrease)	(12,300)
Forecast Reserve Movement for 2017/2018 – Increase / (Decrease)	(12,300)
Estimated Reserve Balance at 30 June 2018	$815,500

Section 64 Developer Contributions

Opening Reserve Balance at 1 July 2017	$9,583,600
Plus original budget reserve movement	(188,800)
Less reserve funded carryovers from 2016/2017	(1,949,600)
Resolutions July - September Quarter – increase / (decrease)	0
September Quarterly Review Adjustments – increase / (decrease)	(26,700)
Forecast Reserve Movement for 2017/2018 – Increase / (Decrease)	(2,165,100)
Estimated Reserve Balance at 30 June 2018	$7,418,500

Movements for the Sewerage Fund can be seen in Attachment 1 with a proposed estimated overall decrease to reserves (including S64 Contributions) of $15,000 from the 30 September 2017 Quarter Budget Review.

Legal Expenses

One of the major financial concerns for Council over previous years has been legal expenses. Not only does this item represent a large expenditure item funded by general revenue, but can also be susceptible to large fluctuations.

The table that follows indicates the allocated budget and actual legal expenditure within Council on

a fund basis as at 30 September 2017.

Total Legal Income & Expenditure as at 30 September 2017

Program	2017/2018 Budget ($)	Actual ($)	Percentage To Revised Budget
Income
Legal Expenses Recovered	0	0	0%
Total Income	0	0	0%

Expenditure
General Legal Expenses	201,000	84,328	41.9%
Total Expenditure General Fund	201,000	84,328	41.9%

Note: The above table does not include costs incurred by Council in proceedings after 30 September 2017 or billed after this date. At the time of writing this report, Council has incurred an additional $57,247 of expenditure in October and November 2017.

Byron Railway Precinct Projects

The adopted 2017/2018 Budget Estimates currently provides an allocation of $500,000 funded from the Infrastructure Renewal Reserve for projects related to the Byron Bay Master Plan – Railway Precinct. The 30 September 2017 Quarter Budget Review contains a proposal to reduce this allocation by $260,700 to enable Council to match its contribution to the projects funded by the $260,700 Tourism Demand Driver Infrastructure (TDDI) grant provided to Council.

A summary of the current projects with proposed funded budgets associated with the Byron Railway Precinct should Council adopt this Quarterly Budget Review are outlined in the table below:

Job No	Project	Proposed Budget 2017/2018 $	Funding from TDDI Grant $	Funding from Infrastructure Renewal Reserve $	Funding from Section 94 $
44283.014	Byron Bay Masterplan – Railway Precinct	239,300	0	239,300	0
4835.188	Byron St Connection Upgrade	139,000	69,500	69,500	0
4835.189	Railway Park Upgrade	237,500	118,700	118,700	0
4835.190	Visitor Centre Refurbishment	130,000	50,000	50,000	30,000
4835.191	Visitor Centre Technology Project	45,000	22,500	22,500	0
	Total	790,800	260,700	500,000	30,000

With the addition of the TDDI grant revenue to Council’s existing budget allocation of $500,000, there is now $790,800 available towards projects in the Byron Railway Precinct.

In relation to any further projects relating to the Byron Railway Precinct in terms of budget allocation, these will be reported to Council for consideration through the Budget Review process as they arise.

Financial Implications

The 30 September 2017 Quarter Budget Review of the 2017/2018 Budget has decreased the overall budget result by $161,900. As a result there is a reduction of $161,900 to the estimated unrestricted cash balance attributable to the General Fund, with this becoming an estimated $940,600 at 30 June 2018. This is below the adopted target of Council of $1,000,000. It is recommended that Council will need to recover the 2017/2018 budget result to at least a balanced outcome over the remainder of the 2017/2018 financial year and be conscious of this when considering matters with financial implications.

Statutory and Policy Compliance Implications

In accordance with Regulation 203 of the Local Government (General) Regulation 2005 the Responsible Accounting Officer of a Council must:-

(1) Not later than 2 months after the end of each quarter (except the June quarter), the responsible accounting officer of a council must prepare and submit to the council a budget review statement that shows, by reference to the estimate of income and expenditure set out in the statement of the council’s revenue policy included in the operational plan for the relevant year, a revised estimate of the income and expenditure for that year.

(2) A budget review statement must include or be accompanied by:

(a) a report as to whether or not the responsible accounting officer believes that the statement indicates that the financial position of the council is satisfactory, having regard to the original estimate of income and expenditure, and

(b) if that position is unsatisfactory, recommendations for remedial action.

(3) A budget review statement must also include any information required by the Code to be included in such a statement.

Statement by Responsible Accounting Officer

This report indicates that the short term financial position of the Council is still satisfactory for the 2017/2018 financial year, having consideration of the original estimate of income and expenditure at the 30 September 2017 Quarter Budget Review.

This opinion is based on the estimated General Fund Unrestricted Cash Result position and that the current indicative budget position for 2017/2018 outlined in this Budget Review is recovered during the remainder of the 2017/2018 financial year. It is most important this occurs and the current projected budget deficit of $204,600 does not deteriorate further.

There needs to be an awareness that any modifications proposed for Council’s budget are not approved without consideration of funding if additional expenditure is proposed through either reallocation of existing budgets, additional revenue or available reserves.

Venue	Conference Room, Station Street, Mullumbimby
Date	Thursday, 16 November 2017
Time	2.00pm