Notice of Meeting
Finance Advisory Committee Meeting
A Finance Advisory Committee Meeting of Byron Shire Council will be held as follows:
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Venue |
Conference Room, Station Street, Mullumbimby |
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Date |
Thursday, 9 May 2019 |
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Time |
2.00pm |
Vanessa Adams
Director Corporate and Community Services I2019/684
Distributed 02/05/19
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
2. Declarations of Interest – Pecuniary and Non-Pecuniary
3. Adoption of Minutes from Previous Meetings
3.1 Finance Advisory Committee Meeting held on 14 February 2019
4. Staff Reports
Corporate and Community Services
4.1 Quarterly Update - Implementation of Special Rate Variation......................................... 4
4.2 Budget Review - 1 January 2019 to 31 March 2019........................................................ 9
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: I2019/672
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. Whilst Council is no longer developing an annual Financial Sustainability Plan (from 2018/2019 onwards), it is important to provide progressive reporting on the implementation of the SRV.
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 31 March 2019.
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RECOMMENDATION: That the Finance Advisory Committee notes the quarterly update on the Special Rate Variation Implementation as at 31 March 2019. |
1 2018-19
Special Rate Management Report as at 31 March 2019 reported to Finance Advisory
Committee 9/5/2019, E2019/30628 , page 8⇩ 
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 2018 to 31 March 2019 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, the second year of the increase, estimated at $2,276,400.
Upon adoption of the 2018/2019 Budget Estimates, Council resolved to undertake the program of capital and maintenance works, including the additional SRV revenue and other funding, 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 the 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.
STRATEGIC CONSIDERATIONS
Community Strategic Plan and Operational Plan
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CSP Objective |
L2 |
CSP Strategy |
L3 |
DP Action |
L4 |
OP Activity |
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Community Objective 5: We have community led decision making which is open and inclusive |
5.2 |
Create a culture of trust with the community by being open, genuine and transparent |
5.2.1 |
Provide timely, accessible and accurate information to the community |
5.2.1.3 |
Report on progress of Delivery Program actions |
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Legal/Statutory/Policy Considerations
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.
Financial Considerations
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 end of the third quarter of the 2018/2019 financial year.
The total 2017/2018 SRV Allocation for 2018/2019 as indicated in Attachment 1 is $2,530,800. Whilst the 2018/2019 SRV levy is $2,276,400, the difference of $254,400 is unexpended funds from 2017/2018 that have been carried forward to the current financial year.
Consultation and Engagement
Prior to the approval of the SRV, Council undertook extensive community consultation. This report also provides an opportunity for the community to receive a quarterly update on the implementation of the SRV for the current financial year. Final outcomes for the 2018/2019 financial year will also be published in Council’s Annual Report in accordance with the approval conditions set by IPART.
BYRON SHIRE COUNCIL
Staff Reports - Corporate and Community Services 4.2
Report No. 4.2 Budget Review - 1 January 2019 to 31 March 2019
Directorate: Corporate and Community Services
Report Author: James Brickley, Manager Finance
File No: I2019/682
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 2018/2019 financial year, reviewed as at 31 March 2019.
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.
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RECOMMENDATION: That the Finance Advisory Committee recommends to Council: 1. That Council authorises the itemised budget variations as shown in Attachment 2 (#E2019/31364) which include the following results in the 31 March 2019 Quarterly Review of the 2018/2019 Budget:
a) General Fund – $0 change to the Estimated Unrestricted Cash Result b) General Fund - $5,141,900 increase in reserves c) Water Fund - $3,003,000 increase in reserves d) Sewerage Fund - $3,062,200 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 31 March 2019.
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1 Budget
Variations for General, Water and Sewerage Funds, E2019/31363 , page 20⇩
2 Itemised
Listing of Budget Variations for General, WWater and Sewerage Funds, E2019/31364 ,
page 98⇩ 
3 Integrated
Planning and Reporting Framework (IP&R) required Quarterly Review
Statements, E2019/31365 , page 109⇩
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 half of the 2018/2019 financial year. This report considers the March 2019 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 intended to provide Councillors with more detailed information to assist with decision making regarding Council’s finances.
Attachment 1 has the following reporting hierarchy:
Consolidated Budget Cash Result
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General Fund Cash Result Water Fund Cash Result Sewer Cash Result
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Principal Activity Principal Activity Principal Activity
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Operating Income Operating Expenditure Capital income Capital Expenditure
The pages are presented (from left to right) 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, the September budget review, resolutions between October and December, the December review, resolutions between January and March, the re-vote (or adjustment for this review) and then the revised position projected for 30 June 2019 as at 31 March 2019.
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 corresponds to the notes at the end of the Attachment which explain the variation.
There is also information detailing restricted assets (reserves) to show 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:-
On 10 December 2010 the Office of Local Government issued 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 Council’s 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 Council’s 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 12 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 31 March 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 October to December 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 2018/2019 financial year projected to 30 June 2019 and revised as at 31 March 2019.
|
2018/2019 Budget Review Statement as at 31 March 2019 |
Original Estimate (Including Carryovers) 1/7/2018 |
Adjustments to 31 Mar 2019 including Resolutions* |
Proposed 31 Mar 2019 Review Revotes |
Revised Estimate 30/6/2019 at 31/03/2019 |
|
Operating Revenue |
81,580,000 |
1,418,700 |
262,800 |
83,261,500 |
|
Operating Expenditure |
86,541,800 |
5,296,200 |
312,400 |
92,150,400 |
|
Operating Result – Surplus/Deficit |
(4,961,800) |
(3,877,500) |
(49,600) |
(8,888,900) |
|
Add: Capital Revenue |
25,396,200 |
(9,740,100) |
(1,189,400) |
14,466,700 |
|
Change in Net Assets |
20,434,400 |
(13,617,600) |
(1,239,000) |
5,577,800 |
|
Add: Non Cash Expenses |
13,678,900 |
925,700 |
0 |
14,604,600 |
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Add: Non-Operating Funds Employed |
3,899,000 |
4,634,000 |
436,000 |
8,969,000 |
|
Subtract: Funds Deployed for Non-Operating Purposes |
(63,028,000) |
9,308,600 |
12,010,100 |
(41,709,300) |
|
Cash Surplus/(Deficit) |
(25,015,700) |
1,250,700 |
11,207,100 |
(12,557,900) |
|
Restricted Funds – Increase / (Decrease) |
(25,031,500) |
1,266,500 |
11,207,100 |
(12,557,900) |
|
Forecast Result for the Year – Surplus/(Deficit) – Unrestricted Cash Result |
15,800 |
(15,800) |
0 |
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 31 March 2019:
|
Opening Balance – 1 July 2018 |
$1,145,200 |
|
Plus original budget movement and carryovers |
15,800 |
|
Council Resolutions July – September Quarter |
(53,000) |
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Recommendations September Budget Review – increase/(decrease) |
37,200 |
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Council Resolutions October – December Quarter |
($20,000) |
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Recommendations December Budget Review – increase/(decrease) |
20,000 |
|
Council Resolutions January – March Quarter |
0 |
|
Recommendations within this Review – increase/(decrease) |
0 |
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Forecast Unrestricted Cash Result – Surplus/(Deficit) – 30 June 2019 |
0 |
|
Estimated Unrestricted Cash Result Closing Balance – 30 June 2019 |
$1,145,200 |
Overall, the General Fund financial position has remained balanced as a result of this budget review, leaving the forecast cash result for 2018/2019 also balanced.
Council Resolutions
There were no Council resolutions during the January to March quarter that affected the forecast cash result.
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 |
126,600 |
126,600 |
0 |
|
Corporate & Community Services |
(186,800) |
(265,000) |
78,200 |
|
Infrastructure Services |
(5,361,100) |
(5,420,700) |
59,600 |
|
Sustainable Environment & Economy |
(425,200) |
(287,400) |
(137,800) |
|
Total Budget Movements |
(5,846,500) |
(5,846,500) |
0 |
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 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 Manager’s program, it is proposed to increase the Legal Services budget by $126,600 to allow for the anticipated increase in legal costs prior to the end of the financial year. This can be funded from the Legal Services reserve and legal fees recovered. This increase in expenditure will fully deplete the legal services reserve. Council will need to address the funding for the legal services reserve.
Corporate and Community Services
· In the Information Services program, it is proposed to increase revenue and expenditure by $55,400 due to the final instalment of the grant for the Smart Cities & Suburbs 3D Modelling Solutions project. It is proposed to decrease operating expenditure for Server Hardware Maintenance ($15,000), Document Production Costs ($2,400), and Multi Function Printer rent and maintenance ($10,000), as actual expenditure will be under the current allocated budgets. These adjustments against expenditure are offset through support services costs allocated to other budget programs.
· In the Corporate Services Program, it is proposed to decrease expenditure due to Delegations Management ($2,000), Grants Management, ($35,000) and Procurement Expenses ($6,000) expected to remain unexpended in 2018/19. There are also savings of $80,500 that can be recognised against salaries due to vacancies that have occurred to different positions during the year. The decrease in the Corporate Services program is offset by a support service cost adjustment of the same amount so no budget change is realised in the program. However, the decrease in support service costs are realised in other programs of Council through a decrease in their support service costs.
· In the Community Development program, it is proposed to increase operating income by $10,000 due to the final instalment of the Love Byron Halls project being received and decrease operating expenditure by $42,900 for Schoolies Approvals being less than the budget ($3,700) and budgets no longer required for the Social Innovation/Entrepreneurship Projects ($5,000) and the Youth Small Changes Grants ($5,500). It is also proposed to remove $25,500 of the Urgent/Unplanned Community Building maintenance budget and place back in the 2007/08 Special Rate reserve. This can then be used to fund part of the Solar Panel Installation in the Facilities Management program. It is proposed to decrease support service costs by $3,000.
· In the Sandhills program, it is proposed to decrease operating income and expenditure by $38,000. Sandhills does not currently have any children with special needs, so the Special Needs funding grant will not be received. This is offset by a decrease in inclusion support workers’ employee costs for staff that would normally assist any special needs children.
· In the Other Children’s Service program, it is proposed to decrease operating income by $35,700 as grants for special needs will not be received. None of Council’s OOSH services currently has any students with special needs.
· In the Public Libraries program, it is proposed to decrease capital expenditure by removing the Brunswick Heads Library Upgrade ($235,000) (Council funding) from the budget, as a grant needed to complete the project has not been approved.
Infrastructure Services
· In the Supervision & Administration program, it is proposed to decrease the salaries budget by $160,000. In the Infrastructure Services directorate, the majority of salaries are costed against the Supervision & Administration program. These costs are then dispersed across the other Infrastructure Services programs dependent on the position’s estimated time spent working within that program. These percentages are determined when the budget is created. During the year, some costs that have been budgeted for in this program have been costed against different projects and maintenance, therefore creating savings in these ledger accounts. An increase in the costs associated with uniform issues is also required ($30,000). The overall decrease expenditure within the Supervision & Administration program is offset by a support service cost adjustment of the same amount so no budget change is realised in the program. However, the decrease in support service costs is realised in other Infrastructure Services programs through a decrease in their support service costs.
· In the Projects & Commercial Development program, it is proposed to decrease capital expenditure due to various works that will not be completed in the 2018/2019 financial year.
· In the Emergency Services program, it is proposed to decrease operating expenditure by $4,200 due to actual expenditure for emergency services contributions (RFS, NSW Fire and SES) being less than the budget ($18,100), a decrease against Tweed RFS mobile charges ($7,800), an increase against the North Byron Flood Risk Management Study & Plan to match grant funding to assist a consultant in completing additional work ($23,000) and a support service cost decrease ($1,300).
· In the Local Roads and Drainage program, there are a number of adjustments outlined under Note 15 in the Budget Variations explanations section of Attachment 1. Further disclosure is included in the fifth and sixth pages 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 $45,900 to reflect the actual amount approved by the RMS for the block grant and decrease the capital budget by $70,000 for the Hinterland Way project that has been completed.
· In the Open Space and Recreation program, there are a number of adjustments outlined under Note 17 in the Budget Variations explanations section of Attachment 1. Further disclosure is included in the eighth and ninth pages of Attachment 2 under the budget program heading Open Space & Recreation.
· In the Waste & Recycling program, it is proposed to decrease operating revenue due to income for the Collection Contract charge for administration not required ($150,000), and actual income of Commercial - Annual Charges ($50,000) and the Annual Waste Operations Charge ($32,000) being higher than the budget. It is proposed to decrease operating expenditure due to the expenditure associated with the Collection Contract charge for admin ($150,000) and a support service adjustment of $5,500. It is proposed to decrease capital expenditure due to the removal of the budget for the Tip Shop Relocation ($360,000) and the Organics Drop-Off Area ($250,000) as these projects will not be completed in 2018/19.
· In the Cavanbah Centre program, it is proposed to decrease operating income by $25,000 for the Total Complex Hire as this will not be received in 2018/19.
· In the Holiday Park programs, it is proposed to create a budget of $10,000 to assist in the upcoming tender for the Holiday Parks, remove the budget for the Amenities Block replacement at Suffolk Park Holiday Park ($110,600), moving the budget to 2019/20 and creating a budget for the purchase of permanent sites at Suffolk Park Holiday Park ($250,000) subject to a report to Council on 16 May 2019.
In the Facilities Management program, it is proposed to decrease capital expenditure due to removing the budget for Public Toilets ($216,000) as works are still in the planning stage and the location of toilets is still to be determined, a decrease against the Mullumbimby Pool CCTV project ($80,000) as the grant will not be received to fund this project, an increase to the budget for the Byron Surf Club Roof Sheeting ($161,300), a budget created for land acquired at Main Arm ($6,400) and a budget increase for additional works related to the Solar Panel Installation in the Council car park ($50,100).
Sustainable Environment and Economy
· In the Development and Certification program, it is proposed to decrease income by $373,000 due to a decline in income received for DA Fees ($180,000), Compliance Certificates – Inspections ($65,600), Construction Certificates ($50,000), and Section 68 Approvals & Inspection - Pt B ($98,100) and an increase against actual income received for the Information & Technology Service Fee. This is largely due to a decrease in the number of Development Applications received and the market share for Construction Certificates dropping with additional providers offering this service. Some of the decrease to income can be offset by a transfer from the Information & Technology Service Fee reserve ($117,300).
· In the Planning Policy & Natural Environment program, it is proposed to decrease operating expenditure due to the Jonson Street Protection Works Stage 1 ($149,800) and the Bangalow Village Plan ($20,700) being moved to the draft 2019/20 budget and the Byron Rural Settlement Strategy ($10,000), CZMP for Byron Bay Embayment ($24,600), Estuary CZMP ($5,000) and Mullumbimby Masterplan Project Plan ($49,400) being returned to reserves as the budgets are not required in 2018/19.
· In the Environment & Compliance program, it is proposed to transfer $69,300 from the Environment Enforcement Levy reserve to cover the decrease in income in the Development & Certification program.
· In the Economic Development program, it is proposed to increase operating income and expenditure by $10,700 due to income received for NR Food Tourism Industry Workshops ($3,600) and Byron Trails Visitor Map ($7,100). It is proposed to decrease expenditure budgets for the Incubation Project ($14,900), Events Communications and Applications ($10,000) and Project 2 - Priority Sectors/Issues ($7,100) as these budgets are not required in 2018/19.
WATER FUND
After completion of the 2017/2018 Financial Statements the Water Fund as at 30 June 2018 had 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 |
|
Resolutions October - December Quarter – increase / (decrease) |
0 |
|
December Quarterly Review Adjustments – increase / (decrease) |
515,600 |
|
Resolutions January - March Quarter – increase / (decrease) |
0 |
|
March Quarterly Review Adjustments – increase / (decrease) |
2,561,000 |
|
Forecast Reserve Movement for 2018/2019 – Increase / (Decrease) |
163,400 |
|
Estimated Reserve Balance at 30 June 2019 |
$7,086,900 |
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 |
|
Resolutions October - December Quarter – increase / (decrease) |
0 |
|
December Quarterly Review Adjustments – increase / (decrease) |
0 |
|
Resolutions January - March Quarter – increase / (decrease) |
0 |
|
March Quarterly Review Adjustments – increase / (decrease) |
442,000 |
|
Forecast Reserve Movement for 2018/2019 – Increase / (Decrease) |
(1,164,200) |
|
Estimated Reserve Balance at 30 June 2019 |
$2,693,600 |
Movements for Water Fund can be seen in Attachment 1 with a proposed estimated increase to reserves (including S64 Contributions) overall of $3,003,000 from the 31 March 2019 Quarter Budget Review.
SEWERAGE FUND
After completion of the 2017/2018 Financial Statements the Sewer Fund as at 30 June 2018 had 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 |
|
Resolutions October - December Quarter – increase / (decrease) |
0 |
|
December Quarterly Review Adjustments – increase / (decrease) |
2,099,000 |
|
Resolutions January - March Quarter – increase / (decrease) |
0 |
|
March Quarterly Review Adjustments – increase / (decrease) |
2,177,800 |
|
Forecast Reserve Movement for 2018/2019 – Increase / (Decrease) |
(1,730,200) |
|
Estimated Reserve Balance at 30 June 2019 |
$6,976,600 |
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 |
|
Resolutions October - December Quarter – increase / (decrease) |
0 |
|
December Quarterly Review Adjustments – increase / (decrease) |
0 |
|
Resolutions January - March Quarter – increase / (decrease) |
0 |
|
March 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) |
|
Resolutions October - December Quarter – increase / (decrease) |
(856,000) |
|
December Quarterly Review Adjustments – increase / (decrease) |
50,000 |
|
Resolutions January - March Quarter – increase / (decrease) |
0 |
|
March Quarterly Review Adjustments – increase / (decrease) |
884,400 |
|
Forecast Reserve Movement for 2018/2019 – Increase / (Decrease) |
(2,038,600) |
|
Estimated Reserve Balance at 30 June 2019 |
$7,013,000 |
Movements for the Sewerage Fund can be seen in Attachment 1 with a proposed estimated overall increase to reserves (including S64 Contributions) of $3,062,200 from the 31 March 2019 Quarter Budget Review.
Legal Expenses
One of the major financial concerns for Council over previous years has been legal expenses. Not only does this item represent a large expenditure item funded by general revenue, but it can also be susceptible to large fluctuations.
The table that follows indicates the allocated budget and actual legal expenditure within Council on
a fund basis as at 31 March 2019.
Total Legal Income & Expenditure as at 31 March 2019
|
Program |
2018/2019 Budget ($) |
Actual ($) |
Percentage To Revised Budget |
|
Income |
|
|
|
|
Legal Expenses Recovered |
4,000 |
4,000 |
100% |
|
Total Income |
4,000 |
4,000 |
100% |
|
|
|
|
|
|
Expenditure |
|
|
|
|
General Legal Expenses |
306,600 |
306,987 |
100.13% |
|
Total Expenditure General Fund |
306,600 |
306,987 |
100.13% |
Note: The above table does not include costs incurred by Council in proceedings after 31 March 2019 or billed after this date. At the time of writing this report, Council has incurred an additional $35,804 of expenditure in April 2019 with a further commitment of $9,124. It is proposed to transfer an additional $126,600 from the Legal Services Reserve within this review to cover additional legal expenses expected this financial year. This increase in expenditure will fully deplete the legal services reserve. Council will need to address the funding for the legal services reserve.
STRATEGIC CONSIDERATIONS
Community Strategic Plan and Operational Plan
|
CSP Objective |
L2 |
CSP Strategy |
L3 |
DP Action |
L4 |
OP Activity |
||||||
|
Community Objective 5: We have community led decision making which is open and inclusive |
5.5 |
Manage Council’s finances sustainably |
5.5.1 |
Enhance the financial capability and acumen of Council |
5.5.1.1 |
Financial reporting as required provided to Council and Management |
||||||
Legal/Statutory/Policy Considerations
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.
Financial Considerations
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 31 March 2019 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.
It is also again noted that Council will need to address the current level of the Legal Services Reserve which will be fully depleted if adjustments within this review are actioned.
