Notice of Meeting
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, 14 November 2019 |
|
Time |
2.00pm |
Vanessa Adams Director
Corporate and Community Services I2019/1868
Distributed 07/11/19
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 Code of Conduct for Councillors (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 the Code of Conduct for Councillors.
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.
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 of the provisions in the Code of Conduct (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 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 8 August 2019
4. Staff Reports
Corporate and Community Services
4.1 Unrestricted Cash and Reserves at 30 June 2019........................................................... 4
4.2 Quarterly Update - Implementation of Special Rate Variation....................................... 12
4.3 Budget Review - 1 July 2019 to 30 September 2019..................................................... 17
BYRON SHIRE COUNCIL
Staff Reports - Corporate and Community Services 4.1
Staff Reports - Corporate and Community Services
Report No. 4.1 Unrestricted Cash and Reserves at 30 June 2019
Directorate: Corporate and Community Services
Report Author: James Brickley, Manager Finance
File No: I2019/1767
Summary:
This report has been prepared to allow the Finance Advisory Committee to note the Reserve Balances as at 30 June 2019.
At its Ordinary Meeting held on 24 October 2019 Council adopted the 2018/2019 Financial Statements (Resolution: 19-542) that incorporate the results outlined in this report
|
RECOMMENDATION: 1. That the Reserve Balances as outlined in Attachment 1 (#E2019/80264) at 30 June 2019 be noted by the Finance Advisory Committee.
2. That the Unrestricted Cash Balance of $1,000,000 as at 30 June 2019 be noted by the Finance Advisory Committee.
|
1 Schedule
of Reserves as at 30 June 2019, E2019/80264
, page 8⇩ 
REPORT
This report has been prepared to allow the Finance Advisory Committee to note the Reserve Balances as at 30 June 2019 and the Unrestricted Cash Balance at 30 June 2019 as an indicator of Council’s liquidity position.
At its Ordinary Meeting held on 24 October 2019 Council adopted the 2018/2019 Financial Statements (Resolution 19-542) 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 25(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 25(b) of Council’s annual Financial Statements. On a consolidated basis at 30 June 2019, Council had $3.65 of unrestricted current assets to each $1 of unrestricted current liabilities. At 30 June 2018, this ratio was $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 25(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 2019, Council was at 11.02 months. 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 2019 was $1,000,000, being $145,211 less than amount that was available in 2017/2018. This means that all cash and investments held by Council of $78,369,259 as at 30 June 2019 were restricted for a purpose by legislation, funding condition or Council resolution except for $1,000,000.
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 (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 2019 that maintained its adopted target of $1,000,000 and that it has done this for the last four 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 2019 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 2019 (and detailed in Note 6(c) to the annual Financial Statements) the following relate to reserves restricted against available cash and investments compared to balances at 30 June 2018:
|
|
30 June 2019 $ |
30 June 2018 $ |
|
Total Cash and Investments |
78,369,259 |
77,400,336 |
|
Less: total external restrictions (reserves) |
55,988,330 |
56,355,880 |
|
Less: total internal restrictions (reserves) |
21,380,929 |
19,899,245 |
|
Total unrestricted cash and investments |
1,000,000 |
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 2018/2019 Financial Statements at its Ordinary Meeting held on 24 October 2019. Council further reviews the position of held reserves through setting the annual budget and at each quarterly budget review.
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 |
5.5.2 |
Ensure the financial integrity and sustainability of Council through effective planning and reporting systems (SP) |
5.5.2.2 |
Complete annual statutory financial reports |
|
|||||||
Legal/Statutory/Policy Considerations
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.
Financial Considerations
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 2019 for information.
Staff Reports - Corporate and Community Services 4.2
Report No. 4.2 Quarterly Update - Implementation of Special Rate Variation
Directorate: Corporate and Community Services
Report Author: James Brickley, Manager Finance
File No: I2019/1834
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 on 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 30 September 2019.
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RECOMMENDATION: That the Finance Advisory Committee notes the quarterly update on the Special Rate Variation Implementation as at 30 September 2019.
|
1 2017-18
Special Rate Management Report as at 30 September 2019 reported to Finance
Advisory Committee 14 November 2019, E2019/81088
, page 16⇩ 
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 as advice on the implementation of the SRV and the current status of expenditure from 1 July 2019 to 30 September 2019 as detailed in Attachment 1, being the third 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 2019 and this included applying the third tranche of the 7.5% ordinary rate increase for 2019/2020, continuing the revised ordinary rating structure adopted by Council for 2017/2018.
The yield from the SRV for 2017/2018 (the first year of the increase) was $1,185,000 with the yield for 2018/2019 being $2,276,400 and for 2019/2020 being $3,475,300.
Upon adoption of the 2019/2020 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 2019/2020 financial year, any adjustments required to the expenditure budgets identified in the schedule of capital and maintenance works funded by the SRV revenue were presented to Council for approval via the Quarterly Budget Review process.
The expenditure program adopted for the 2019/2020 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
|
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 |
5.2 |
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 |
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 on the expenditure of the Special Rate Variation Funds up to the end of the first quarter of the 2019/2020 financial year.
The total 2017/2018 SRV Allocation for 2019/2020 as indicated in Attachment 1 is $3,508,600.
Note that whilst the 2018/2019 SRV levy is $3,475,300, the difference of $33,300 is unexpended funds from 2018/2019 that were carried forward to the 2019/2020 financial year for heavy patching.
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 2019/2020 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 4.3
Report No. 4.3 Budget Review - 1 July 2019 to 30 September 2019
Directorate: Corporate and Community Services
Report Author: James Brickley, Manager Finance
File No: I2019/1856
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 2019/2020 financial year, reviewed as at 30 September 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.
|
RECOMMENDATION: That the Finance Advisory Committee recommends to Council: 1. That Council authorises the itemised budget variations as shown in Attachment 2 (#E2019/81261) which includes the following results in the 30 September 2019 Quarterly Review of the 2019/2020 Budget:
a) General Fund – $132,400 increase to the Estimated Unrestricted Cash Result b) General Fund - $2,564,600 decrease in reserves c) Water Fund - $222,500 increase in reserves d) Sewerage Fund - $638,200 decrease in reserves
2. That Council adopts the revised General Fund Estimated Unrestricted Cash Result of $1,000,000 for the 2019/2020 financial year as at 30 September 2019. |
1 Budget
Variations for General, Water and Sewerage Funds, E2019/81259 , page 26⇩ 
2 Itemised
Listing of Budget Variations for General, Water and Sewerage Funds, E2019/81261 ,
page 87⇩ 
3 Integrated
Planning and Reporting Framework (IP&R) required Quarterly Review
Statements, E2019/81266 , page 93⇩
REPORT
Council adopted the 2019/2020 budget on 27 June 2019 via Resolution 19-325. It also considered and adopted the budget carryovers from the 2018/2019 financial year, to be incorporated into the 2019/2020 budget at its Ordinary Meeting held on 22 August 2019 via Resolution 19-390. Since that date, Council has reviewed the budget taking into consideration the 2018/2019 Financial Statement results and progress through the first quarter of the 2019/2020 financial year. This report considers the September 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 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
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 |
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 |
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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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|
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 |
|||||||
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 27 June 2019 plus the adopted carryover budgets from 2018/2019 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 2020 as at 30 September 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 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 2020 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 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 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 Counci’ls liquidity and the adequacy of recovery efforts
o Asset Renewals Ratio – This assesses the rate at which assets are being renewed relative to the rate at which they are depreciating.
These may be expanded in future to accommodate any additional KPIs that Council may adopt to use in the Long Term Financial Plan (LTFP.)
Contracts and Other Expenses - This report highlights any contracts Council entered into during the July to September quarter that are greater then $50,000.
CONSOLIDATED RESULT
The following table provides a summary of the overall Council budget on a consolidated basis inclusive of all Funds budget movements for the 2019/2020 financial year projected to 30 June 2020 but revised as at 30 September 2019.
|
2019/2020 Budget Review Statement as at 30 September 2019 |
Original Estimate (Including Carryovers) 1/7/2019 |
Adjustments to 30 Sept 2019 including Resolutions* |
Proposed 30 Sept 2019 Review Revotes |
Revised Estimate 30/6/2020 at 30/9/2019 |
|
Operating Revenue |
87,128,100 |
0 |
(306,000) |
86,822,100 |
|
Operating Expenditure |
93,783,700 |
0 |
624,700 |
94,408,400 |
|
Operating Result – Surplus/Deficit |
(6,655,600) |
0 |
(930,700) |
(7,586,300) |
|
Add: Capital Revenue |
28,167,600 |
0 |
(107,600) |
28,060,600 |
|
Change in Net Assets |
21,512,000 |
0 |
(1,038,300) |
20,473,700 |
|
Add: Non Cash Expenses |
14,657,200 |
0 |
0 |
14,657,200 |
|
Add: Non-Operating Funds Employed |
1,844,000 |
0 |
0 |
1,844,000 |
|
Subtract: Funds Deployed for Non-Operating Purposes |
(56,567,300) |
0 |
(1,809,600) |
(58,376,900) |
|
Cash Surplus/(Deficit) |
(18,554,100) |
0 |
(2,847,900) |
(21,402,000) |
|
Restricted Funds – Increase / (Decrease) |
(18,421,700) |
0 |
(2,980,300) |
(21,402,000) |
|
Forecast Result for the Year – Surplus/(Deficit) – Unrestricted Cash Result |
(132,400) |
0 |
132,400 |
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 2019:
|
Opening Balance – 1 July 2019 |
$1,000,000 |
|
Plus original budget movement and carryovers |
(132,400) |
|
Council Resolutions July – September Quarter |
0 |
|
Recommendations within this Review – increase/(decrease) |
132,400 |
|
Forecast Unrestricted Cash Result – Surplus/(Deficit) – 30 June 2020 |
0 |
|
Estimated Unrestricted Cash Result Closing Balance – 30 June 2020 |
$1,000,000 |
The General Fund financial position overall has increased by $132,400 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 not passed any resolutions that impact the unrestricted cash result for the July 2019 to September 2019 quarter. However, at the Ordinary Meeting held on 27 June 2019 Council considered a Notice of Motion regarding Arts and Cultural Funding. Council resolved resolution 19-339 part 3: ‘That this item be considered in the next Quarterly Budget Review with potential funding sources to provide the requested funding up to $100,000, as identified in the Councillor’s notes be identified’.
The next Quarterly Budget Review referred to in resolution 19-339 part 3 is the subject of this report. In preparing this Quarterly Budget Review, it has not been possible to identify funding at this point. It is understood this matter will be subject to a presentation at the late November 2019 Strategic Planning Workshop and will be reconsidered as part of the 31 December 2019 Quarter Budget Review.
Budget Adjustments
The budget adjustments identified in Attachments 1 and 2 for the General Fund have been summarised by Budget Directorate in the following table:
|
Budget Directorate |
Revenue Increase/ (Decrease) $ |
Expenditure Increase/ (Decrease) $ |
Accumulated Surplus (Working Funds) Increase/ (Decrease) $ |
|
General Manager |
0 |
0 |
0 |
|
Corporate & Community Services |
396,900 |
169,100 |
227,800 |
|
Infrastructure Services |
1,739,200 |
1,748,700 |
(9,500) |
|
Sustainable Environment & Economy |
112,000 |
197,900 |
(85,900) |
|
Total Budget Movements |
2,248,100 |
2,115,700 |
132,400 |
Budget Adjustment Comments
Within each of the Budget Directorates of the General Fund are a series of budget adjustments identified in detail at Attachment 1 and 2. More detailed notes on these are provided in Attachment 1 but in summary the major additional items included are summarised below by Directorate and are included in the overall budget adjustments table above:
Corporate and Community Services
· In the General Purpose Revenues Program an additional $233,400 in revenue has been recognised as the allocation for Council’s 2019/2020 Financial Assistance Grant is more than originally budgeted. This was reported to Council in September 2019.
· In the Information Services program it is proposed to move budgets to reflect actual expenditure. There is no effect on the budget result of this program.
· In the Corporate Services Program it is proposed to decrease the budget for insurance premiums by $62,200 and transfer to the risk management reserve to cover any unforeseen insurance excess payments. Council has taken a higher excess position in respect of public liability insurance which has reduced the insurance premium payable.
· In the Community Development program it is proposed to increase the budget for the RFS relocation to the Cook Pioneer Centre by $165,000, funded from developer contributions, specifically Shire Support Services – Rural South..
Infrastructure Services
· In the Emergency Services program, it is proposed to increase operating income due to a milestone grant of $44,200 to be received for the North Byron Floodplain Risk Management Study and Plan (FRMS&P). It is proposed to decrease capital expenditure for the Flood Warning Network by $6,900. This was expended in the 2018/19 financial year.
· In the Local Roads and Drainage program, there are a number of adjustments outlined under Note 10 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 income and expenditure by $198,600 to reflect the actual block grant to be received.
· In the Open Space and Recreation program, there are a number of adjustments outlined under Note 12 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 increase the budget by $129,000 for the Dingo Lane Solar Farm project to bring the budget in line with the cost to completion of the current part of the project and $40,000 for shelters to cover bins at the waste and recycling centre. These are funded through the Waste Management reserve.
· In the Holiday Park program, it is proposed to increase capital expenditure by $250,000 for the purchase of two permanent sites at Suffolk Park Holiday Park. This can be funded through the Holiday Park reserve.
· In the Facilities Management program it is proposed to decrease the budgets for the Stronger Country Communities grant funded projects as they incurred expenditure in the 2018/19 financial year but had the whole project budget allocated in 2019/20.
Sustainable Environment and Economy
· In the Planning Policy & Natural Environment program, it is proposed to increase operating income and expenditure due to grants received for the Byron Habitat Corridor project ($17,000) and the NE Hinterland Koala Conservation Project ($45,000). It is also proposed to add a budget for Lot 22 Mullumbimby Policy and Plan of Management update ($15,000) and the Centennial Circuit one-way trial ($30,000).
· In the Environment & Compliance program, it is proposed to transfer $34,900 to the plant reserve as a contribution to the cost of upgraded and fit for purpose enforcement vehicles.
WATER FUND
After completion of the 2018/2019 Financial Statements the Water Fund as at 30 June 2019 has a capital works reserve of $8,324,600 and held $3,117,100 in section 64 developer contributions.
The estimated Water Fund reserve balances as at 30 June 2020, and forecast in this Quarter Budget Review, are derived as follows:
Capital Works Reserve
|
Opening Reserve Balance at 1 July 2019 |
$8,324,600 |
|
Plus original budget reserve movement |
(31,100) |
|
Less reserve funded carryovers from 2018/2019 |
(375,700) |
|
Resolutions July - September Quarter – increase / (decrease) |
0 |
|
September Quarterly Review Adjustments – increase / (decrease) |
(100,000) |
|
Forecast Reserve Movement for 2019/2020 – Increase / (Decrease) |
(506,800) |
|
Estimated Reserve Balance at 30 June 2020 |
$7,817,800 |
Section 64 Developer Contributions
|
Opening Reserve Balance at 1 July 2019 |
$3,117,100 |
|
Plus original budget reserve movement |
(966,100) |
|
Less reserve funded carryovers from 2018/2019 |
(503,800) |
|
Resolutions July - September Quarter – increase / (decrease) |
0 |
|
September Quarterly Review Adjustments – increase / (decrease) |
322,500 |
|
Forecast Reserve Movement for 2019/2020 – Increase / (Decrease) |
(1,147,400) |
|
Estimated Reserve Balance at 30 June 2020 |
$1,969,700 |
Movements for Water Fund can be seen in Attachment 1 with a proposed estimated increase to reserves (including S64 Contributions) overall of $222,500 from the 30 September 2019 Quarter Budget Review.
SEWERAGE FUND
After completion of the 2018/2019 Financial Statements the Sewer Fund as at 30 June 2019 has a capital works reserve of $6,392,800 and plant reserve of $773,400. It also held $8.685.200 in section 64 developer contributions.
Capital Works Reserve
|
Opening Reserve Balance at 1 July 2019 |
$6,392,800 |
|
Plus original budget reserve movement |
(1,005,900) |
|
Less reserve funded carryovers from 2018/2019 |
(1,454,800) |
|
Resolutions July - September Quarter – increase / (decrease) |
0 |
|
September Quarterly Review Adjustments – increase / (decrease) |
(618,200) |
|
Forecast Reserve Movement for 2019/2020 – Increase / (Decrease) |
(3,078,900) |
|
Estimated Reserve Balance at 30 June 2020 |
$3,313,900 |
Plant Reserve
|
Opening Reserve Balance at 1 July 2019 |
$773,400 |
|
Plus original budget reserve movement |
0 |
|
Less reserve funded carryovers from 2018/2019 |
0 |
|
Resolutions July - September Quarter – increase / (decrease) |
0 |
|
September Quarterly Review Adjustments – increase / (decrease) |
0 |
|
Forecast Reserve Movement for 2019/2020 – Increase / (Decrease) |
0 |
|
Estimated Reserve Balance at 30 June 2020 |
$773,400 |
Section 64 Developer Contributions
|
Opening Reserve Balance at 1 July 2019 |
$8,685,200 |
|
Plus original budget reserve movement |
(816,100) |
|
Less reserve funded carryovers from 2018/2019 |
(1,018,700) |
|
Resolutions July - September Quarter – increase / (decrease) |
0 |
|
September Quarterly Review Adjustments – increase / (decrease) |
(20,000) |
|
Forecast Reserve Movement for 2019/2020 – Increase / (Decrease) |
(1,854,800) |
|
Estimated Reserve Balance at 30 June 2020 |
$6,830,400 |
Movements for the Sewerage Fund can be seen in Attachment 1 with a proposed estimated overall decrease to reserves (including S64 Contributions) of $638,200 from the 30 September 2019 Quarter Budget Review.
Legal Expenses
One of the major financial concerns for Council over previous years has been legal expenses. Not only does this item represent a large expenditure item funded by general revenue, but can also be susceptible to large fluctuations.
The table that follows indicates the allocated budget and actual legal expenditure within Council on
a fund basis as at 30 September 2019.
Total Legal Income & Expenditure as at 30 September 2019
|
Program |
2019/2020 Budget ($) |
Actual ($) |
Percentage To Revised Budget |
|
Income |
|
|
|
|
Legal Expenses Recovered |
0 |
4,000 |
0% |
|
Total Income |
0 |
4,000 |
0% |
|
|
|
|
|
|
Expenditure |
|
|
|
|
General Legal Expenses |
204,400 |
132,100 |
64.63% |
|
Total Expenditure General Fund |
204,400 |
128,100 |
62.67% |
Note: At the time of writing this report, Council has incurred an additional $40,900 of legal costs, leaving $31,400 available for the remainder of the financial year. This should be monitored closely and additional funds allocated from the Legal reserve at future budget reviews if required.
Financial Implications
The 30 September 2019 Quarter Budget Review of the 2019/2020 Budget has improved the overall budget result by $132,400. 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 $1,000,000 at 30 June 2020. 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.
STRATEGIC CONSIDERATIONS
Community Strategic Plan and Operational Plan
|
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 |
5.5 |
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 |
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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 2019/2020 financial year, having consideration of the original estimate of income and expenditure at the 30 September 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 2019/2020 outlined in this Budget Review remains for the remainder of the 2019/2020 financial year.
