Agenda of Finance Advisory Committee Meeting

BYRON SHIRE COUNCIL

Staff Reports - Corporate and Community Services 4.1

Staff Reports - Corporate and Community Services

Report No. 4.1 Carryovers for Inclusion in the 2020-2021 Budget

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2020/1178

Summary:

This report is prepared for the Committee to endorse that Council considers and adopts the carryover Budget allocations for works and services, either commenced and not completed, or not commenced in the 2019/2020 financial year for inclusion in the 2020/2021 Budget Estimates.

Each year Council allocates funding for works and services across all programs. For various reasons, some of these works and services are incomplete at the end of the financial year. The funding for these works is restricted at the end of the financial year, and is carried over as a budget allocation revote to the following year, to fund the completion of the work or service.

This report identifies all the works and services recommended to be carried over from the 2019/2020 financial year to the 2020/2021 Budget Estimates. The report also identifies the funding for each recommended budget allocation carryover.

RECOMMENDATION:

That the Committee endorses the recommendation that Council approves the works and services (with respective funding) shown in Attachment 1 (#E2020/60174) to be carried over from the 2019/2020 financial year and that the carryover budget allocations be adopted as budget revotes for inclusion in the 2020/2021 Budget Estimates.

Attachments:

1 2019-2020 Schedule of Carryovers for inclusion in 2020-2021 Budget, E2020/60174 , page 9⇩

REPORT

Each year Council allocates funding for works and services across all programs. For various reasons, some of these works and services are incomplete at the end of the financial year. The funding for these works and services is restricted at the end of the financial year to be carried over to the following year for completion.

This report identifies all the works and services to be carried over to the 2020/2021 Budget Estimates and the respective funding of each, relating to works and services not completed during the course of the 2019/2020 financial year. The specific details of all carryover works and services that are the subject of this report are outlined in Attachment 1.

The works and services are fully funded and have no impact on Council’s Unrestricted Cash Result or the 2020/2021 Budget Estimates result.

As in previous years there is a significant amount of carryovers with total carryovers for 2020/2021 amounting to $10,123,500. Table 1 below outlines this and a comparison of carryovers from previous financial years.

Table 1 - Value of budget carryovers 2016/17 – 2020/21

Fund	2016/17 ($)	2017/18 ($)	2018/19 ($)	2019/20 ($)	2020/21 ($)
General	5,022,100	7,102,100	9,004,500	6,024,800	7,875,500
Water	729,900	2,770,100	879,500	301,900	1,118,800
Sewer	600,100	2,051,800	2,473,500	625,400	1,129,200
Total	6,352,100	11,924,000	12,357,500	6,952,100	10,123,500

General Fund

The value of works carried over to 2020/2021 for the General Fund has increased by almost 31% from the 2019/2020 amount ($1,859,300). Of the $7,875,500 of General Fund carryovers, approximately 46% ($3,593,700) is attributable to Local Roads and Drainage projects not completed in 2019/2020 to be carried forward to 2020/2021. The extent of carryovers in the General Fund is also relevant to the number of and size of grant funded works.

Major carryover items in this fund are as follows:

· Building Community Resilience Grant	$1,300,000
· Election Commitment Grant Funded Major Patching Program	$580,000
· Byron Bay Bypass	$1,458,900
· Byron Bay Skatepark	$287,100
· Former Mullumbimby Hospital	$294,500
· Suffolk Park Pump Track	$146,400
· South Golden Beach Flood Pump	$170,000
· South Arm Bridge	$475,100

Water and Sewer Funds

Carryovers for the Water Fund have increased by $816,900 and for the Sewer Fund by $503,800 compared to the carryover for the 2019/2020 financial year. Details of these carryovers are included in Attachment 1.

The following table outlines the project status of Local Roads & Drainage capital works carryovers for Councillors’ information, where works are in progress or contracts have been awarded at the time of writing this report.

Table 2 – Schedule of Carryover works current status

Project	Carryover $	Project Status
NSW Crime Prevention Grant 2018/19	33,400	Project scope increased to provide additional LED lighting to some areas with Byron Bay town centre as part of Essential Energy staged rollout of LED
Bridge - South Arm	475,100	Under Construction
Cycleway - Bangalow Rd/Broken Head Rd	30,400	Under Construction and continuing 20/21 financial year
The Pocket Road Segment 568.10 (CH1.79-2	27,400	Carry over budget for stage 2 works to cover contingencies
Byron Bay High School Turnaround Arakwal	43,100	Works essentially complete. Carry Over $6k for revegetation works and the balance to the Suffolk Park Cycleway to fund cycleway connections and diversion at the high school
Suffolk Park - Bangalow Road Onroad Cycle Path	25,000	Under Construction
The Pocket Road Stage 2 (Ch 2,810 - 3,69	16,800	Planning and Design Underway
Brunswick Heads - South Arm Carpark	30,400	Planning and Design Underway
Bangalow Road (Ch 7,540 - 8,490)	139,000	Construction programmed to agreed milestones
ECG Major Patching Program	580,000	Construction programmed in accordance with grant funding deed
Byron Bay Bypass	1,458,900	The Byron Bypass continues to be constructed on all four stages with the noise abatement works scheduled to start in September and the project completed in 20/21
Integrated Transport Management Strategy	42,900	Strategy still under development.
Belongil Ck & Broken Hd to Cape Byron CMP	26,000	Recruitment underway for staff to oversee project
Brunswick Heads Paid Parking Strategy	2,600	Ongoing parking strategy review and reporting to Council in 20/21 FY
Project Investigation & Planning	4,000	Ongoing – combine with funds in 20/21 to develop project scoping documents and business cases
Shire Wide - Bike Plan	3,600	Ongoing
Ewingsdale Road Shared path from Quarry	3,900	Planning and Design Underway
Approaches to Tallow Creek footbridge	40,100	Works programmed with additional funds from bridge program in 20/21.
Studal Lane Drainage Upgrade - Design	24,200	Planning and Design Underway
Extend SGB Flood Pump inlet screen	15,000	Under Construction
SGB Flood Pump variable speed drive	170,000	Under Construction
Main Arm Rd Causeway #7 Replacement	88,700	Underway – Will be finished in 2020/21
Main Arm Rd Causeway #12 Replacement	2,900	Underway – Will be finished in 2020/21
Main Arm Rd Causeway #14 Replacement	11,800	Underway – Will be finished in 2020/21
Johnston Lane Causeway - Private Works	5,500	Underway – Will be finished in 2020/21
Causeways, Culvert and Bridge Renewal In	86,200	Works completed in 2020/21
Bangalow Sportsfield Access Road	15,600	Planning and Design Underway
Upper Wilsons Creek #10 Causeway Replace	11,400	Revegetation works outstanding
Blackbean Road Causeway Replacement	4,100	Minor rehab works required to approach’s following recent rain event
Repentance Creek Road Causeway	78,400	Under Construction
Middleton Street (Ch 0 - 130) - DESIGN	3,200	Under Construction
Brunswick Heads Scout Hall Road Safety	5,200	Unspent portion of 2019/20 budget
Seven Mile Beach Rd Investigations	1,700	Unspent portion of 2019/20 budget – add to 2020/21 budget
Tweed Street Projects	17,700	Under Construction
Bridge - Scarabolotti's	8,900	To cover land acquisition costs incurred in 2021.
Progression of Myocum Quarry as a Resource Recovery Centre	50,000	Continue works already commenced
Lawson Street, Byron (Middleton to Tennyson)	9,200	Carry over into the ECG project for Lawson St
Reflections Holiday Park Drainage	1,400	Unspent portion of 2019/20 budget – add to 2020/21 budget
Total	3,593,700

In accordance with Regulation 211 of the Local Government (General) Regulation 2005, Council conducted an Extraordinary Meeting to approve expenditure and voting of money on 30 July 2020 via Resolution 20-357. The expenditure items that are the subject of this report were not included in the 2020/2021 Budget Estimates, but now need to be. The intent of this report is to seek Council approval to revote the carryovers from the 2019/2020 financial year and to adopt the budget carryovers for inclusion in the 2020/2021 Budget Estimates.

At its meeting held on 28 March 2013 the Strategic Planning Committee considered Report 4.3 on Council’s financial position for the 2012/2013 financial year. The recommendations from this meeting were adopted by Council at its Ordinary Meeting held on 18 April 2013 through resolution 13-164. Committee recommendation SPC 4.3 in part 5 included the following process to be applied to the consideration of any amount identified as a carryover to the 2013/14 and future Budgets and funded from general revenues:

That Council determines that any general revenue funded allocated expenditure, not

expended in a current financial year NOT be automatically carried over to the next

financial year before it is reviewed and priorities established.

STRATEGIC CONSIDERATIONS

Community Strategic Plan and Operational Plan

CSP Objective

CSP Strategy

DP Action

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

5.5.1.2

Support the organisation in identifying financial implications of projects, proposals and plans

Legal/Statutory/Policy Considerations

Regulation 211 of the Local Government (General) Regulation 2005 outlines the requirements of Council relating to authorisation of expenditure. Specifically the Regulation 211 states:

(1) A council, or a person purporting to act on behalf of a council, must not incur a liability for the expenditure of money unless the council at the annual meeting held in accordance with subclause (2) or at a later ordinary meeting:

(a) has approved the expenditure, and

(b) has voted the money necessary to meet the expenditure.

(2) A council must each year hold a meeting for the purpose of approving expenditure and voting money.

BYRON SHIRE COUNCIL

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: I2020/1202

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 to provide quarterly updates to Council through the Finance Advisory Committee on adopted Plan’s implementation. 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 June 2020.

RECOMMENDATION:

That the Finance Advisory Committee notes the quarterly update on the Special Rate Variation Implementation as at 30 June 2020 as outlined in Attachment 1 (#E2020/63603).

Attachments:

1 2017-2018 Special Rate Variation Expenditure as at 30 June 2020, E2020/63603 , page 18 ⇩

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 June 2020 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 19-429 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 are 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 fourth quarter of the 2019/2020 financial year.

The total 2017/2018 SRV Allocation for 2019/2020 as indicated in Attachment 1 is $3,438,600.

Note that whilst the 2018/2019 SRV levy is $3,475,300, $33,300 in unexpended funds from 2018/2019 was carried forward to the 2019/2020 financial year for heavy patching, providing a total of $3,508,600. The difference between this and the amount shown in Attachment 1 is $70,000. This amount has been placed in reserve as it was previously partly allocated to Bangalow Road construction works that are now being funded from the $25million Election Commitment Grant.

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 April 2020 to 30 June 2020

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2020/1208

Summary:

This report is prepared in accordance with the format required by Clause 203 of the Local Government (General) Regulation 2005 to inform Council and the Community of Council’s estimated financial position for the 2018/2019 financial year, reviewed as at 30 June 2020.

The Quarterly Budget Review for the June 2020 Quarter has been prepared to assist Council with its policy and decision making on matters that could have short, medium and long term implications on financial sustainability.

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 Attachments 1 and 2 for Council’s consideration and authorisation.

The report also provides an indication of the financial position of Council at 30 June 2020. It should be noted that the figures provided are subject to completion and audit of the Council’s Financial Statements for 2019/2020. Any major variances will be included as part of the report adopting the financial statements in November 2020.

RECOMMENDATION:

1. That Council authorises the itemised budget variations as shown in Attachment 2 (#E2020/63870) which includes the following results in the 30 June 2020 Quarterly Review of the 2019/2020 Budget:

a) General Fund - $699,700 change in Unrestricted Cash Result

b) General Fund - $10,440,600 increase in reserves

c) Water Fund - $1,966,800 increase in reserves

d) Sewerage Fund - $1,491,600 increase in reserves.

2. That Council adopts the revised General Fund Estimated Unrestricted Cash Result of $723,400 for the 2019/2020 financial year.

Attachments:

1 Budget Variations for General, Water and Sewerage Funds, E2020/63869 , page 27 ⇩

2 Itemised Listing of Budget Variations, for General, Water and Sewerage Funds, E2020/63870 , 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 2019/2020 financial year.

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, as well as a breakdown by Fund and Principal Activity. The document in Attachment 1 outlines the budget review 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 in 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, the September review, resolutions between October and December, the December review, resolutions between January and March, the March review, resolutions between April and June and the revote (or adjustment for this review) and then the revised position projected for 30 June 2020.

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 explain the variation.

There is also information detailing restricted assets (reserves) to show estimated balances as at 30 June 2020 for all 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 Quarterly Budget Review Guidelines via Circular 10-32. Reports to Council concerning Quarterly Budget Reviews normally provide statements in accordance with these guidelines as a separate attachment. Given that there is no statutory obligation for Council to produce a Quarterly Budget Review as at 30 June each financial year, the statements required by the guidelines have not been produced for this specific report.

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.

2019/2020 Budget Review Statement as at 30 June 2020	Original Estimate (Including Carryovers) 1/7/2019	Adjustments to 30 June 2020 including Resolutions*	Proposed 30 June 2020 Review Revotes	Revised Estimate 30/6/2020
Operating Revenue	87,128,100	(3,773,700)	4,615,000	87,969,400
Operating Expenditure	93,783,700	(1,212,100)	(3,390,000)	89,181,600
Operating Result – Surplus/Deficit	(6,655,600)	(2,561,600)	8,005,000	(1,212,200)
Add: Capital Revenue	28,167,600	(3,411,600)	(2,090,200)	22,665,800
Change in Net Assets	21,512,000	(5,973,200)	5,914,800	21,453,600
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)	7,088,200	8,104,600	(41,374,500)
Cash Surplus/(Deficit)	(18,554,100)	1,115,000	14,019,400	(3,419,700)
Restricted Funds – Increase / (Decrease)	(18,421,700)	1,958,900	13,319,700	(3,143,100)
Forecast Result for the Year – Surplus/(Deficit) – Unrestricted Cash Result	(132,400)	(843,900)	699,700	(276,600)

GENERAL FUND

In terms of the General Fund projected Unrestricted Cash Result the following table provides a reconciliation of the estimated position as at 31 June 2020:

Opening Balance – 1 July 2019	$1,000,000
Plus original budget movement and carryovers	(132,400)
Council Resolutions July – September Quarter	0
September Budget Review	132,400
Council Resolutions October – December Quarter	0
December Budget Review	(150,000)
Council Resolutions January – March Quarter	0
March Budget Review	(826,300)
Council Resolutions April – June Quarter	0
Recommendations within this Review – increase/(decrease)	699,700
Forecast Unrestricted Cash Result – Surplus/(Deficit) – 30 June 2020	(276,600)
Estimated Unrestricted Cash Result Closing Balance – 30 June 2020	$723,400

The General Fund financial position overall has increased by $699,700 as a result of this budget review, bringing the forecast unrestricted cash result for the year to $723,400. This is below Council’s target of $1,000,000 but given the current Pandemic circumstances is certainly acceptable. The proposed budget changes are detailed in Attachment 1 and summarised further in this report below.

Council Resolutions

There were no Council resolutions that impacted the budget result in the April 2020 to June 2020 quarter.

Budget Adjustments

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

Council Directorate	Revenue Increase/ (Decrease) $	Expenditure Increase/ (Decrease) $	Budget Result Increase/ (Decrease) $
General Manager	(41,600)	(294,300)	252,700
Corporate & Community Services	1,602,300	1,135,100	467,200
Infrastructure Services	(4,567,900)	(4,560,100)	(7,800)
Sustainable Environment & Economy	(470,400)	(458,000)	(12,400)
Total Budget Movements	(3,477,600)	(3,883,000)	699,700

Budget Adjustment Comments

General Fund budget adjustments are identified in detail at Attachment 1 and 2. More detailed notes on these are provided in Attachment 1 with the majority of budget revotes proposed to reflect actual results achieved.

The major consideration with this budget review is the reduction in expenditure associated with projects not completed and under-expenditure. Council will also be considering a report to this Ordinary Council Meeting regarding carryover items from the 2019/2020 financial year for work not completed to be added to the 2020/2021 Budget Estimates. This report also considers the implications of that report.

Specific Cash Position

On reconciling Council’s total cash and investment position at 30 June 2020 compared to the reserve movements outlined in this Budget Review, there is an indication that Council may have total unrestricted cash and investments of $723,400, a decrease of 27.6% from 2018/2019. This can be attributed to the effect that the COVID-19 pandemic has had on income Council expected to receive and expenditure impacts. Council commenced the 2019/2020 financial year with unrestricted cash of $1,000,000 which was an attainment of one of Council’s short term financial goals. The actual amounts eventually allocated are contingent upon finalisation of the 2019/2020 financial statements. These are subject to external audit and further reporting to Council.

Following adoption of the 31 March 2020 Quarter Budget Review Council was forecasting a budget deficit of $976,300 for the 2019/2020 financial year. Whilst Council will likely end the 2019/2020 financial year with a budget deficit (estimated at $276,600) this is a significant and welcome financial improvement for Council. In such unprecedented times, the indicative financial outcome for the 2019/2020 financial year is a more than satisfactory outcome. Nevertheless, moving forward it will be necessary for Council to continue to manage and endeavour to improve the projected budget deficit for the 2020/2021 financial year.

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 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)
Resolutions October - December Quarter – increase / (decrease)	0
December Quarterly Review Adjustments – increase / (decrease)	(4,600)
Resolutions January - March Quarter – increase / (decrease)	0
March Quarterly Review Adjustments – increase / (decrease)	550,200
Resolutions April - June Quarter – increase / (decrease)	(608,500)
June Quarterly Review Adjustments – increase / (decrease)	1,506,500
Forecast Reserve Movement for 2019/2020 – Increase / (Decrease)	936,800
Estimated Reserve Balance at 30 June 2020	$9,261,400

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
Resolutions October - December Quarter – increase / (decrease)	0
December Quarterly Review Adjustments – increase / (decrease)	(665,000)
Resolutions January - March Quarter – increase / (decrease)	0
March Quarterly Review Adjustments – increase / (decrease)	(105,800)
Resolutions April - June Quarter – increase / (decrease)	0
June Quarterly Review Adjustments – increase / (decrease)	460,300
Forecast Reserve Movement for 2019/2020 – Increase / (Decrease)	(1,457,900)
Estimated Reserve Balance at 30 June 2020	$1,659,200

Movements for Water Fund can be seen in Attachment 1 with a proposed estimated increase to reserves (including S64 Contributions) overall of $1,966,800 from the 30 June 2020 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)
Resolutions October - December Quarter – increase / (decrease)	0
December Quarterly Review Adjustments – increase / (decrease)	300,800
Resolutions January - March Quarter – increase / (decrease)	(147,000)
March Quarterly Review Adjustments – increase / (decrease)	3,012,900
Resolutions April - June Quarter – increase / (decrease)	0
June Quarterly Review Adjustments – increase / (decrease)	404,100
Forecast Reserve Movement for 2019/2020 – Increase / (Decrease)	491,900
Estimated Reserve Balance at 30 June 2020	$6,884,700

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
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
Resolutions April - June Quarter – increase / (decrease)	0
June Quarterly Review Adjustments – increase / (decrease)	122,800
Forecast Reserve Movement for 2019/2020 – Increase / (Decrease)	122,800
Estimated Reserve Balance at 30 June 2020	$896,200

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)
Resolutions October - December Quarter – increase / (decrease)	0
December Quarterly Review Adjustments – increase / (decrease)	(521,500)
Resolutions January - March Quarter – increase / (decrease)	0
March Quarterly Review Adjustments – increase / (decrease)	668,200
Resolutions April - June Quarter – increase / (decrease)	0
June Quarterly Review Adjustments – increase / (decrease)	964,700
Forecast Reserve Movement for 2019/2020 – Increase / (Decrease)	(743,400)
Estimated Reserve Balance at 30 June 2020	$7,941,800

Movements for the Sewerage Fund can be seen in Attachment 1 with a proposed estimated overall increase to reserves (including S64 Contributions) of $1,491,600 from the 30 June 2020 Quarter Budget Review.

Legal Expenses

Legal expenses are funded by general revenue and can potentially be a significant cost and also one which is subject to fluctuation.

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

a fund basis as at 30 June 2020.

Total Legal Income and Expenditure as at 30 June 2020

Program	2019/2020 Budget ($)	Actual ($)	Percentage To Revised Budget
Income
Legal Expenses Recovered	39,500	39,500	100%
Total Income	39,500	39,500	100%

Expenditure
General Legal Expenses	595,700	595,708	100%
Total Expenditure General Fund	595,700	595,708	100%

Note: The above table does not include costs incurred by Council in proceedings after 30 June 2020 or billed after this date. During the financial year, an additional $391,300 was added to the original budget of $204,400 subject to adoption of this Quarterly Budget Review. This was allocated in previous Quarterly Budget Reviews and a further $84,200 proposed in this Quarterly Budget Review with funding from the legal services reserve and legal expenses recovered. The expenditure budget in the table above for legal expenses assumes the additional $84,200 in budget is approved.

The current status of the Legal Services Reserve is shown below:

Legal Reserve

Opening Reserve Balance at 1 July 2019	$500,000
Less:-
General Legal Expenses (December 2019 QBR)	(267,600)
Proposed 30 June 2020General Legal Expenses (June 2020 QBR)	(84,200)
Proposed 30 June 2020 Quarter Budget Review Adjustment	351,800
Estimated Reserve Balance at as at 30 June 2020	$500,000

Financial Implications

The 30 June 2020 Quarter Budget Review of the 2019/2020 Budget Estimates forecasts an improved outcome to the estimated budget attributable to the General Fund assuming all revotes of income and expenditure reported for Council’s consideration are approved. Overall, the short term financial position still needs to be carefully monitored on an ongoing basis.

Note that the financial outcomes outlined in this Budget Review should be considered in the context that they are indicative. Council is yet to finalise its financial statements for the year ended 30 June 2020 which will also be subject to external independent audit.

It is expected that Council will receive a report regarding the formal adoption of its financial statements for the year ended 30 June 2020 at its Ordinary Meeting in November 2020.

This report was also considered by the Finance Advisory Committee at its meeting held on 20 August 2020.

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.

(1) 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 2019/2020 financial year, having consideration of the original estimate of income and expenditure at the 30 June 2020 Quarter Budget Review.

This opinion is based on the estimated Unrestricted Cash Result position at 30 June 2020, albeit lower than Council’s adopted target position, plus the significant improvement in the 2019/2020 budget position since the 31 March 2020 Quarterly Budget Review.

Venue	Council Chambers, Station Street, Mullumbimby
Date	Thursday, 20 August 2020
Time	2.00pm