Notice of Meeting

 

 

 

 

 

bsc_logo_150dpi_rgb

 

 

 

Finance Advisory Committee Meeting

 

 

A Finance Advisory Committee Meeting of Byron Shire Council will be held as follows:

 

Venue

Conference Room, Station Street, Mullumbimby

Date

Thursday, 15 November 2018

Time

2.00pm

 

 

 

 

 

Vanessa Adams

Director Corporate and Community Services                                                                  I2018/2159

                                                                                                                                    Distributed 08/11/18

 

 


CONFLICT OF INTERESTS

What is a “Conflict of Interests” - A conflict of interests can be of two types:

Pecuniary - an interest that a person has in a matter because of a reasonable likelihood or expectation of appreciable financial gain or loss to the person or another person with whom the person is associated.

Non-pecuniary – a private or personal interest that a Council official has that does not amount to a pecuniary interest as defined in the Local Government Act (eg. A friendship, membership of an association, society or trade union or involvement or interest in an activity and may include an interest of a financial nature).

Remoteness – a person does not have a pecuniary interest in a matter if the interest is so remote or insignificant that it could not reasonably be regarded as likely to influence any decision the person might make in relation to a matter or if the interest is of a kind specified in Section 448 of the Local Government Act.

Who has a Pecuniary Interest? - a person has a pecuniary interest in a matter if the pecuniary interest is the interest of the person, or another person with whom the person is associated (see below).

Relatives, Partners - a person is taken to have a pecuniary interest in a matter if:

§  The person’s spouse or de facto partner or a relative of the person has a pecuniary interest in the matter, or

§  The person, or a nominee, partners or employer of the person, is a member of a company or other body that has a pecuniary interest in the matter.

N.B. “Relative”, in relation to a person means any of the following:

(a)   the parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descends or adopted child of the person or of the person’s spouse;

(b)   the spouse or de facto partners of the person or of a person referred to in paragraph (a)

No Interest in the Matter - however, a person is not taken to have a pecuniary interest in a matter:

§  If the person is unaware of the relevant pecuniary interest of the spouse, de facto partner, relative or company or other body, or

§  Just because the person is a member of, or is employed by, the Council.

§  Just because the person is a member of, or a delegate of the Council to, a company or other body that has a pecuniary interest in the matter provided that the person has no beneficial interest in any shares of the company or body.

Disclosure and participation in meetings

§  A Councillor or a member of a Council Committee who has a pecuniary interest in any matter with which the Council is concerned and who is present at a meeting of the Council or Committee at which the matter is being considered must disclose the nature of the interest to the meeting as soon as practicable.

§  The Councillor or member must not be present at, or in sight of, the meeting of the Council or Committee:

(a)   at any time during which the matter is being considered or discussed by the Council or Committee, or

(b)   at any time during which the Council or Committee is voting on any question in relation to  the matter.

No Knowledge - a person does not breach this Clause if the person did not know and could not reasonably be expected to have known that the matter under consideration at the meeting was a matter in which he or she had a pecuniary interest.

Participation in Meetings Despite Pecuniary Interest (S 452 Act)

A Councillor is not prevented from taking part in the consideration or discussion of, or from voting on, any of the matters/questions detailed in Section 452 of the Local Government Act.

Non-pecuniary Interests - Must be disclosed in meetings.

There are a broad range of options available for managing conflicts & the option chosen will depend on an assessment of the circumstances of the matter, the nature of the interest and the significance of the issue being dealt with.  Non-pecuniary conflicts of interests must be dealt with in at least one of the following ways:

§  It may be appropriate that no action be taken where the potential for conflict is minimal.  However, Councillors should consider providing an explanation of why they consider a conflict does not exist.

§  Limit involvement if practical (eg. Participate in discussion but not in decision making or vice-versa).  Care needs to be taken when exercising this option.

§  Remove the source of the conflict (eg. Relinquishing or divesting the personal interest that creates the conflict)

§  Have no involvement by absenting yourself from and not taking part in any debate or voting on the issue as if the provisions in S451 of the Local Government Act apply (particularly if you have a significant non-pecuniary interest)

RECORDING OF VOTING ON PLANNING MATTERS

Clause 375A of the Local Government Act 1993 – Recording of voting on planning matters

(1)   In this section, planning decision means a decision made in the exercise of a function of a council under the Environmental Planning and Assessment Act 1979:

(a)   including a decision relating to a development application, an environmental planning instrument, a development control plan or a development contribution plan under that Act, but

(b)   not including the making of an order under Division 2A of Part 6 of that Act.

(2)   The general manager is required to keep a register containing, for each planning decision made at a meeting of the council or a council committee, the names of the councillors who supported the decision and the names of any councillors who opposed (or are taken to have opposed) the decision.

(3)   For the purpose of maintaining the register, a division is required to be called whenever a motion for a planning decision is put at a meeting of the council or a council committee.

(4)   Each decision recorded in the register is to be described in the register or identified in a manner that enables the description to be obtained from another publicly available document, and is to include the information required by the regulations.

(5)   This section extends to a meeting that is closed to the public.

 


BYRON SHIRE COUNCIL

Finance Advisory Committee Meeting

 

 

BUSINESS OF MEETING

 

1.    Apologies

2.    Declarations of Interest – Pecuniary and Non-Pecuniary

3.    Adoption of Minutes from Previous Meetings

3.1       Finance Advisory Committee Meeting held on 16 August 2018

4.    Staff Reports

Corporate and Community Services

4.1       Quarterly Update - Implementation of Special Rate Variation......................................... 4

4.2       Unrestricted Cash and Reserves at 30 June 2018........................................................... 8

4.3       Long Term FInancial Plan 2018-2028............................................................................. 14

4.4       Budget Review - 1 July 2018 to 30 September 2018..................................................... 17   

 

 


BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services                                            4.1

 

 

Staff Reports - Corporate and Community Services

 

Report No. 4.1             Quarterly Update - Implementation of Special Rate Variation

Directorate:                 Corporate and Community Services

Report Author:           James Brickley, Manager Finance

File No:                        I2018/2143

Theme:                         Corporate Management

                                      Financial Services

 

 

Summary:

 

At its Ordinary Meeting held on 2 February 2017 Council 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).

 

At the same Ordinary Meeting Council 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 a quarterly update on implementation of the SRV and expenditure up to 30 September 2018.

 

 

  

 

RECOMMENDATION:

That the Finance Advisory Committee notes the quarterly update on the Special Rate Variation Implementation as at 30 September 2018.

 

 

Attachments:

 

1        2017-18 Special Rate Management Report as at 30 September 2018 reported to Finance Advisory Committee 15/11/2018, E2018/89534 , page 7  

 

 


 

Report

 

At its Ordinary Meeting held on 2 February 2017 Council 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).

 

At its Ordinary Meeting held on 22 June 2017 Council 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.

 

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 September 2018 which is

detailed in Attachment 1 being the second year of the SRV.

 

The levy of Council’s annual rates and charges was completed in accordance with Resolution 18-429 prior to 31 July 2018 and this included applying the second tranche of the 7.5% ordinary rate increase for 2018/2019 continuing the revised ordinary rating structure adopted by Council for 2017/2018.

 

The yield from the SRV for 2017/2018 being the first year of the increase is $1,185,000 with the yield from the SRV for 2018/2019 as the second year of the increase to be estimated at $2,276,400.

 

Upon adoption of the 2018/2019 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 2018/2019 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 2018/2019 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 2018/2019 financial year.

 

The total 2017/2018 SRV Allocation for 2018/2019 as indicated in Attachment 1 is $2,495,500.  Whilst the 2018/2019 levy is $2,276,400, the difference of $219,100 is the amount of the SRV unexpended fro 2017/2018 that has been carried forward to 2018/2019.

 

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, 18-429 and 17-222.


BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services                                 4.1 - Attachment 1

 

PDF Creator


BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services                                            4.2

 

 

Report No. 4.2             Unrestricted Cash and Reserves at 30 June 2018

Directorate:                 Corporate and Community Services

Report Author:           James Brickley, Manager Finance

File No:                        I2018/2146

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 2018.

 

At its Ordinary Meeting held on 18 October 2018 Council adopted the 2017/2018 Financial Statements (Resolution: 18-678) that incorporate the results indicated in this report

 

  

 

RECOMMENDATION:

1.       That the Reserve Balances as outlined in Attachment 1 (#E2018/89575) at 30 June 2018 be noted by the Finance Advisory Committee.

 

2.       That the Unrestricted Cash Balance of $1,145,200 as at 30 June 2018 be noted by the Finance Advisory Committee.

 

 

Attachments:

 

1        2017/2018 Reserves Schedule, E2018/89575 , page 11  

 

 


 

Report

 

This report has been prepared to allow the Finance Advisory Committee to note the Reserve Balances as at 30 June 2018 and the Unrestricted Cash Balance at 30 June 2018 as an indicator of Council’s liquidity position.

 

At its Ordinary Meeting held on 18 October 2018 Council adopted the 2017/2018 Financial Statements (Resolution 18-678) that incorporate the results indicated in this report.

 

In terms of Council being able to fulfil its short term financial commitments liquidity 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 the following indicators provide a clear picture:

 

·    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 the total amount of internal and external restrictions or reserves from total cash and investments held.

 

·    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 24(a) of Council’s annual Financial Statements.  This indicator is usually provided on a consolidated basis i.e. amalgamating all of Council’s General, Water and Sewerage Funds.  However since the 2009/2010 financial year, Councils are required to calculate this ratio and other ratios by Fund for additional disclosure as outlined in note 24(b) of Council’s annual Financial Statements. On a consolidated basis at 30 June 2018, Council had $3.40 of unrestricted current assets to each $1 of unrestricted current liabilities.

 

·    Cash Expense Cover Ratio – this indicator was brought in from the 2013/2014 financial year and is disclosed at note 24(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 2018, Council was at 12.33 months.

 

Unrestricted Cash Balance

 

The Unrestricted Cash Balance disclosed in the Financial Statements as at 30 June 2018 was $1,145,211, the same amount that was available in 2016/2017. This means that all cash and investments held by Council of $77,400,336 as at 30 June 2018 were restricted for a purpose by legislation, funding condition or Council resolution except for $1,145,211.

 

At its Ordinary Meeting held on 8 August 2013 Council 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 any 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 2018 that exceeded its adopted target of $1,000,000 and that it has done this for the last three financial years.

 

Reserves

 

Detailed at Attachment 1 is a listing of Council’s cash funded reserves.  Contained in this listing is the detail and value as at 30 June 2018 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 i.e. legislation, condition etc.  These reserves 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 2018 (and 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 $77,400,336

·  Total external restrictions (reserves) $56,355,879

·  Total internal restrictions (reserves) $19,899,246

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

 

It is appropriate that Council considers its reserves which are restricted against available cash and investments and resolves by resolution to adopt their description and value.  By default this occurred when Council adopted the 2017/2018 Financial Statements at its Ordinary Meeting held on 18 October 2018.  Council further reviews the position of held reserves through setting the annual budget and 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 2018 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 canvassed by the Local Government Code of Accounting Practice and Financial Reporting (as amended) 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                                 4.2 - Attachment 1

PDF Creator


 

PDF Creator


 

PDF Creator


BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services                                            4.3

 

 

Report No. 4.3             Long Term FInancial Plan 2018-2028

Directorate:                 Corporate and Community Services

Report Author:           James Brickley, Manager Finance

File No:                        I2018/2147

Theme:                         Corporate Management

                                      Financial Services

 

 

Summary:

 

At its Meeting held on 16 August 2018 the Finance Advisory Committee received a report on the

working draft of the 20918-2028 Long Term Financial Plan (LTFP).  The Finance Advisory Committee noted the working draft and that a further revision would be provided to the Finance Advisory Committee Meeting to be held on 15 November 2018.

 

Council endorsed this approach at its Meeting held on 20 September 2018 via resolution 18-600.

 

This report provides an update on the 2018-2028 Long Term Financial Plan.

 

 

 

  

 

RECOMMENDATION:

That the Finance Advisory Committee notes the update provided in respect of the 2018-2028 Long Term Financial Plan.

 

 

 

 

 


 

Report

 

At its Meeting held on 16 August 2018 the Finance Advisory Committee received a report on the

working draft of the 2018-2028 Long Term Financial Plan (LTFP).  The Finance Advisory Committee noted the working draft and that a further revision would be provided to the Finance Advisory Committee Meeting to be held on 15 November 2018.

 

Council endorsed this approach at its Meeting held on 20 September 2018 via resolution 18-600.

 

The working draft of the 2018-2028 Long Term Financial Plan (#E2018/66626) provided to the 16 August 2018 Finance Advisory Committee is somewhat different to previous LTFPs developed by Council for the following reasons:

 

·    Aside from the LTFP itself and its modelling, this document provides the context of what the LTFP is about and its relationship as part of the resourcing strategy that underpins Council’s Integrated Planning documents.

·    It contains a new section outlining the Budget Framework guiding the development of Council budgets, which is the first attempt to document the process.

·    It outlines existing Council resolutions that have created specific ‘parameters’ for budget development.

·    It identifies principles which underpin the budget process.

·    It suggests a timeframe for the annual budget process.

 

The latest draft 2018-2028 LTFP contains a base case and a scenario. These are as follows:

 

·    Base case – is currently the 2018/2019 Budget adopted by Council on 28 June 2018 as the starting point with projections based off applying assumptions and a ten year capital works program across all Funds.

·    Scenario – is based on Council acquiring the former Mullumbimby War Memorial Hospital and remediating that site for future redevelopment.  The scenario attempts to model the financial impact of the scenario on the base case.

 

Financial Implications

 

The draft LTFP in its current form is presenting some challenges in terms of the budget position for the General Fund, most specifically for the years 2019/2020 to 2022/2023 where there are indicative budget deficits each year before the budget returns to surplus in 2023/2024.

 

Further work needs to be undertaken to review these projections and address the following items (not in any specific order):

 

·    The Plant Fund runs out of cash in the 2021/2022 financial year, requiring the plant replacement program to be reduced by at least 50% compared to the desired replacement program.

·    Restoration of the Legal Services Reserve to at least $500,000.

·    Review of Waste Operations to incorporate the significant capital expenditure in 2019/2020 that is not affordable irrespective of anticipated part grant funding.

·    Complete the integration of the Section 94 Plan into the Long Term Financial Plan.

·    Review expenditures from the Infrastructure Renewal Reserves x 3.  Council appears to be banking funds so there is scope for additional asset renewal.

·    Whilst fully allocated, review the application of the 2017/2018 Special Rate Variation Funds.

·    The need to remove maintenance funding from Infrastructure Renewal Reserves funded by pay parking and divert to projects.

·    Review the infrastructure backlog and required asset maintenance benchmarks.

·    Look at structural changes to the budget for the 2019/2020 year onwards, especially in operational areas, by identification of new revenue or review of costs to reverse budget deficits projected from 2019/2020 to 2022/2023.

 

Aside from the General Fund, there is also an issue with the Sewerage Fund, given the scale of future capital works and their affordability in the absence of new loan borrowings, in that there needs to be a complete consideration of the Water and Sewerage Business Plans to ensure they are completely integrated into the LTFP.  This work is currently being undertaken by Hydrosphere.

 

Council is about to commence the 2019/2020 Budget process and with the finalisation of the 2017/2018 Financial Statements, it has not been possible to devote the necessary time to consider revision of the projections contained in the LTFP and address the dot points above.  In this respect the revised draft that was to be provided to this Meeting of the Finance Advisory Committee has not been able to be delivered.  It is expected that an update should be able to be provided to the Finance Advisory Committee at its Meeting to be held in February 2019 subject to finalisation of the proposed 2019 Meeting Schedule by Council.

 

Statutory and Policy Compliance Implications

 

Section 403(2) of the Local Government Act 1993

 


BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services                                            4.4

 

 

Report No. 4.4             Budget Review - 1 July 2018 to 30 September 2018

Directorate:                 Corporate and Community Services

Report Author:           James Brickley, Manager Finance

File No:                        I2018/2158

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 2018.

 

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 Office of Local Government in circular 10-32.

 

 

  

 

RECOMMENDATION:

That the Finance Advisory Committee recommends to Council:

1.       That Council authorises the itemised budget variations as shown in Attachment 2 (#E2018/89897) which includes the following results in the 30 September 2018 Quarterly Review of the 2018/2019 Budget:

 

a)      General Fund – $37,200 increase to the Estimated Unrestricted Cash Result

b)      General Fund - $952,700 increase in reserves

c)      Water Fund - $163,900 increase in reserves

d)      Sewerage Fund - $208,200 increase in reserves

 

2.       That Council adopts the revised General Fund Estimated Unrestricted Cash Result           of $1,145,200 for the 2018/2019 financial year as at 30 September 2018.

 

 

Attachments:

 

1        Budget Variations for General, Water and Sewerage Funds, E2018/89888 , page 26  

2        Itemised Listing of Budget Variations for General, Water and Sewerage Funds, E2018/89897 , page 89  

3        Integrated Planning and Reporting Framework (IP&R) required Quarterly Review Statement, E2018/89903 , page 97  

 

 


 

Report

 

Council adopted the 2018/2019 budget on 28 June 2018 via Resolution 18-429.  It also considered and adopted the budget carryovers from the 2017/2018 financial year, to be incorporated into the 2018/2019 budget at its Ordinary Meeting held on 23 August 2018 via Resolution 18-522.  Since that date, Council has reviewed the budget, taking into consideration the 2017/2018 Financial Statement results and progress through the first quarter of the 2018/2019 financial year.  This report considers the September 2018 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 28 June 2018 plus the adopted carryover budgets from 2017/2018 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 2019 as at 30 September 2018.

 

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 2019 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 11 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 2019 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 than $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 2018/2019 financial year projected to 30 June 2019 but revised as at 30 September 2018.

 

 

2018/2019 Budget Review Statement as at 30 September 2018

Original Estimate (Including Carryovers)

1/7/2018

 

Adjustments to 30 Sept 2018 including Resolutions*

Proposed 30 Sept 2018 Review Revotes

 

Revised Estimate 30/6/2019 at 30/9/2018

Operating Revenue

81,580,000

0

142,700

81,722,700

Operating Expenditure

86,541,800

264,500

1,009,500

87,815,800

Operating Result – Surplus/Deficit

(4,961,800)

(264,500)

(866,800)

(6,093,100)

Add: Capital Revenue

25,396,200

0

(117,600)

(25,278,600)

Change in Net Assets

20,434,400

(264,500)

(984,400)

19,185,500

Add: Non Cash Expenses

13,678,900

0

925,700

14,604,600

Add: Non-Operating Funds Employed

3,899,000

0

1,300,000

5,199,000

Subtract: Funds Deployed for Non-Operating Purposes

(63,028,000)

(3,007,700)

120,700

(65,915,000)

Cash Surplus/(Deficit)

(25,015,700)

(3,272,200)

1,362,000

(26,925,900)

Restricted Funds – Increase / (Decrease)

(25,031,500)

(3,219,200)

1,324,800

(26,925,900)

Forecast Result for the Year – Surplus/(Deficit) – Unrestricted Cash Result

15,800

(53,000)

37,200

0

 

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 2018:

 

Opening Balance – 1 July 2018

$1,145,200

Plus original budget movement and carryovers

15,800

Council Resolutions July – September Quarter

(53,000)

Recommendations within this Review – increase/(decrease)

37,200

Forecast Unrestricted Cash Result – Surplus/(Deficit) – 30 June 2019

0

Estimated Unrestricted Cash Result Closing Balance – 30 June 2019

$1,145,200

 

The General Fund financial position overall has increased by $37,200 as a result of this budget review, bringing the forecast cash result for the year back to a balanced result.  The proposed budget changes are detailed in Attachment 1 and summarised further in this report below.

 

Council Resolutions

 

Council has passed the following resolutions within the Budget Review that required funding and have been included::

 

·    Resolution 18-628 part 3 for the Multi Use Byron Shire Rail Corridor:

 

 That Council increase the project budget for the Multi Use of the Byron Rail Corridor by an additional $50,000 funded from the unrestricted cash balance”.

 

·    Resolution 18-630 part 2 for the Support for Drought Relief:

 

“That Council allocate a budget of $3,000 in the 2018/19 financial year funded from the current 2018/19 budget surplus of $15,800”. 

 

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

125,000

125,000

0

Corporate & Community Services

145,900

117,400

28,500

Infrastructure Services

1,387,600

1,367,900

19,700

Sustainable Environment & Economy

(62,200)

(51,200)

(11,000)

Total Budget Movements

1,596,300

1,559,100

37,200

 

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:

 

General Manager

 

·   In the General Managers program the budget Legal Services costs have been moved from the Corporate Services program as per Councils organisation structure.  This will have an impact on the way support service costs are distributed across all budget programs.  In addition, income and expenditure budgets are provided for the implementation of the new Crown Lands Act 2016 ($30,000).

 

·   In the People & Culture program, it is proposed to increase income and expenditure by $47,000 for the annual WHS incentive payment and restrict the funds in a new reserve.

 

Corporate and Community Services

 

·   In the General Purpose Revenues Program an additional $104,900 in revenue has been recognised as the allocation for Council’s 2018/2019 Financial Assistance Grant is more than originally budgeted.

 

·   In the Information Service program it is proposed to increase income and expenditure by $20,000 to evaluate a new WHS risk management/safety management system.

 

·   In the Governance Services Program the Legal Services budget have been moved to the General Managers program.

 

·   In the Sandhills program, it is proposed to increase the budget by $44,000 for the upgrade of the centre.  This has no net effect on the budget result as all movements are taken up through the Children’s Service reserve.

 

·   In the Public Libraries program, it is proposed to increase the budget for the Brunswick Heads Library Upgrade by $85,000, funded from developer contributions to enable Council to apply for a grant to complete the project.

 

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 ($1,102,100) and the property Reserve ($197,900).

 

·   In the Local Roads and Drainage program, there are a number of 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 Local Roads and Drainage. 

 

·   In the Roads and Maritime Services program (RMS) it is proposed to increase the budget by $176,200 for Broken Head Road to reflect the revised cost of the project.

 

·   In the Open Space and Recreation program, there are a number of adjustments outlined under Note 18 in the Budget Variations explanations section of Attachment 1.  Further disclosure is included in the fourth page of Attachment 2 under the budget program heading Open Space & Recreation. 

 

·   In the Waste & Recycling program it is proposed to purchase a loader for the Waste & Recycling Centre ($130,000) and to continue with the Waste Management Strategy ($100,000).  These are funded through the Domestic Waste Management and Waste Management reserves.

 

·   In the Cavanbah Centre program, it is proposed to increase expenditure by $21,000 for additional marketing and $10,000 for DA Activation. 

 

·   In the Facilities Management program it is proposed to increase the budget for the Suffolk Park Hall upgrade by $51,900.

 

Sustainable Environment and Economy

 

·   In the Development and Certification program, it is proposed to decrease income by $80,000 due to a decline in income received for DA Fees ($40,000) and Construction Certificates ($40,000).   This is largely due to a decrease in the number of Development Applications received and the market share for Construction Certificates dropping with additional companies offering this service. 

 

WATER FUND

 

After completion of the 2017/2018 Financial Statements the Water Fund as at 30 June 2018 has a capital works reserve of $6,923,500 and held $3,857,800 in section 64 developer contributions.

 

The estimated Water Fund reserve balances as at 30 June 2019, and forecast in this Quarter Budget Review, are derived as follows:

 

Capital Works Reserve

 

Opening Reserve Balance at 1 July 2018

$6,923,500

Plus original budget reserve movement

(2,627,400)

Less reserve funded carryovers from 2017/2018

(375,700)

Resolutions July -  September Quarter – increase / (decrease)

0

September Quarterly Review Adjustments – increase / (decrease)

89,900

Forecast Reserve Movement for 2018/2019 – Increase / (Decrease)

(2,913,200)

Estimated Reserve Balance at 30 June 2019

$4,010,300

 

Section 64 Developer Contributions

 

Opening Reserve Balance at 1 July 2018

$3,857,800

Plus original budget reserve movement

(746,400)

Less reserve funded carryovers from 2017/2018

(503,800)

Resolutions July -  September Quarter – increase / (decrease)

(430,000)

September Quarterly Review Adjustments – increase / (decrease)

74,000

Forecast Reserve Movement for 2018/2019 – Increase / (Decrease)

(1,606,200)

Estimated Reserve Balance at 30 June 2019

$2,251,600

 

Movements for Water Fund can be seen in Attachment 1 with a proposed estimated increase to reserves (including S64 Contributions) overall of $163,900 from the 30 September 2018 Quarter Budget Review.

 

SEWERAGE FUND

 

After completion of the 2017/2018 Financial Statements the Sewer Fund as at 30 June 2018 has a capital works reserve of $8,706,800 and plant reserve of $704,400. It also held $9,051,600 in section 64 developer contributions.

 

Capital Works Reserve

 

Opening Reserve Balance at 1 July 2018

$8,706,800

Plus original budget reserve movement

(3,480,800)

Less reserve funded carryovers from 2017/2018

(1,454,800)

Resolutions July -  September Quarter – increase / (decrease)

(1,330,000)

September Quarterly Review Adjustments – increase / (decrease)

258,600

Forecast Reserve Movement for 2018/2019 – Increase / (Decrease)

(6,007,000)

Estimated Reserve Balance at 30 June 2019

$2,699,800

 

Plant Reserve

 

Opening Reserve Balance at 1 July 2018

$704,400

Plus original budget reserve movement

0

Less reserve funded carryovers from 2017/2018

0

Resolutions July -  September Quarter – increase / (decrease)

0

September Quarterly Review Adjustments – increase / (decrease)

0

Forecast Reserve Movement for 2018/2019 – Increase / (Decrease)

0

Estimated Reserve Balance at 30 June 2019

$704,400

 

Section 64 Developer Contributions

 

Opening Reserve Balance at 1 July 2018

$9,051,600

Plus original budget reserve movement

(27,900)

Less reserve funded carryovers from 2017/2018

(1,018,700)

Resolutions July -  September Quarter – increase / (decrease)

(1,020,000)

September Quarterly Review Adjustments – increase / (decrease)

(50,400)

Forecast Reserve Movement for 2018/2019 – Increase / (Decrease)

(2,117,000)

Estimated Reserve Balance at 30 June 2019

$6,934,600

 

Movements for the Sewerage Fund can be seen in Attachment 1 with a proposed estimated overall increase to reserves (including S64 Contributions) of $208,200 from the 30 September 2018 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 2018.

 

Total Legal Income & Expenditure as at 30 September 2018

 

 

Program

2018/2019

Budget ($)

 

Actual ($)

Percentage To Revised Budget

Income

 

 

 

Legal Expenses Recovered

0

4,000

0%

Total Income

0

4,000

0%

 

 

 

 

Expenditure

 

 

 

General Legal Expenses

202,600

53,724

26.52%

Total Expenditure General Fund

202,600

53,724

26.52%

 

Note: The above table does not include costs incurred by Council in proceedings after 30 September 2018 or billed after this date.  At the time of writing this report, Council has incurred an additional $66,391 of expenditure in October 2018 with a further commitment of $8,193.

 

Financial Implications

 

The 30 September 2018 Quarter Budget Review of the 2018/2019 Budget has improved the overall budget result by $37,200.  This brings the movement against the unrestricted cash balance attributable to the General Fund back to a balanced result for the year, leaving the estimated unrestricted cash balance attributable to the General Fund at an estimated $1,145,200 at 30 June 2019.  This is a good result for the first quarter, but going forward Council must be conscious of decisions that may affect the unrestricted cash balance when considering matters with financial implications especially where funding sources are not identified.

 

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 2018/2019 financial year, having consideration of the original estimate of income and expenditure at the 30 September 2018 Quarter Budget Review.

 

This opinion is based on the estimated General Fund Unrestricted Cash Result position and that the current indicative budget position for 2018/2019 outlined in this Budget Review remains for the remainder of the 2018/2019 financial year.

 


BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services                                 4.4 - Attachment 1

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services                                                           4.4 - Attachment 2

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services                                 4.4 - Attachment 3

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


 

PDF Creator


BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services                                                           4.4 - Attachment 3

PDF Creator


BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services                                 4.4 - Attachment 3

PDF Creator


 

PDF Creator