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 Unrestricted Cash and Reserves at 30 June 2020

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2020/1731

Summary:

This report has been prepared to allow the Finance Advisory Committee to note the Reserve Balances as at 30 June 2020.

At its Ordinary Meeting held on 22 October 2020 Council referred the Draft 2019/2020 Financial Statements to audit (Resolution: 20-549) that incorporate the results outlined in this report.

RECOMMENDATION:

1. That the Reserve Balances as outlined in Attachment 1 (#E2020/87284) at 30 June 2020 be noted by the Finance Advisory Committee.

2. That the Unrestricted Cash Balance of $724,300 as at 30 June 2020 be noted by the Finance Advisory Committee.

Attachments:

1 Schedule of Reserves as at 30 June 2020, E2020/87284 , page 14 ⇩

REPORT

This report has been prepared to allow the Finance Advisory Committee to note the Reserve Balances as at 30 June 2020 and the Unrestricted Cash Balance at 30 June 2020 as an indicator of Council’s liquidity position.

At its Ordinary Meeting held on 22 October 2020 Council referred the Draft 2019/2020 Financial Statements to audit (Resolution 20-549) that incorporate the results indicated in this report. At the time of preparing this report, the external audit is still to be finalised but is expected to be finalised before this meeting of the Finance Advisory Committee. It is not expected the outcomes of Council’s unrestricted cash and reserve balances will change as a result of the external audit.

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 7(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 27(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 27(b) of Council’s annual Financial Statements. On a consolidated basis at 30 June 2020, Council had $3.14 of unrestricted current assets to each $1 of unrestricted current liabilities. This is a decrease on the previous year where at 30 June 2019, this ratio was $3.65 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 27(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 2020, Council was at 10.79 months. Again this is a decrease on the previous year, where at 30 June 2019 Council was at 11.02 months.

Unrestricted Cash Balance

The Unrestricted Cash Balance disclosed in the Financial Statements as at 30 June 2020 was $724,300, being $275,700 less than the amount available in 2018/2019. This means that all cash and investments held by Council ($76,562,280 as at 30 June 2020) were restricted for a purpose by legislation, funding condition or Council resolution except for $724,300.

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 require any unexpended funds to be reserved as an external restriction. Any reported Unrestricted Cash Balance will always relate to the General Fund.

Council was unable to maintain it’s goal of an unrestricted cash balance at 30 June 2020 of $1,000,000 due to the impacts of the COVID-19 Pandemic in the later half of the 2019/2020 financial year. Given the scale of the pandemic, the adjustments required by Council to mitigate the impact and the drop in revenues, it has been pleasing to retain $724,300 in unrestricted cash given initial forecasts were suggesting a much worse position due to greater anticipated revenue losses.

Nevertheless, Council currently has a budget which indicates a deficit of $356,800 for the 2020/2021 financial year at this point. If it is Council’s intention to restore the unrestricted cash balance back to $1,00,000 at 30 June 2021, which is a strong recommendation, it will need to reverse the current projected budget position and turn that around by $632,500 into a $275,200 surplus. This should be a focus throughout the current financial year.

Reserves

Council’s cash funded reserves are listed in Attachment 1. It shows the detail and value as at 30 June 2020 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.

· 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 resolves to specifically set aside funds. Examples of internal restrictions are also listed in Attachment 1 and also in note 7(c) to Council’s annual Financial Statements.

In summary, as at 30 June 2020 (and detailed in Note 7(c) to the annual Financial Statements) the following relate to reserves restricted against available cash and investments compared to balances at 30 June 2019:

	30 June 2020 $	30 June 2019 $
Total Cash and Investments	76,562,280	78,369,259
Less: total external restrictions (reserves)	49,193,999	55,988,330
Less: total internal restrictions (reserves)	26,643,981	21,380,929
Total unrestricted cash and investments	724,300	1,000,000

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 Draft 2019/2020 Financial Statements at its Ordinary Meeting held on 22 October 2020 and will be further confirmed at the Ordinary Meeting held on 26 November 2020. Council reviews the position of held reserves through the annual budget process and at each quarterly budget review.

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

5.5.2

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 2020 for information.

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: I2020/1739

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 September 2020.

RECOMMENDATION:

That the Finance Advisory Committee notes the quarterly update on the Special Rate Variation Implementation as at 30 September 2020 as outlined in Attachment 1 (#E2020/88148).

Attachments:

1 2017-2018 Special Rate Variation Expenditure as at 30 September 2020, E2020/88148 , page 22 ⇩

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 2020 to 30 September 2020 as detailed in Attachment 1, being the fourth year of the SRV.

The levy of Council’s annual rates and charges was completed in accordance with Resolution 20-355 prior to 31 August 2020 and this included applying the fourth and final tranche of the 7.5% ordinary rate increase for 2020/2021, continuing the revised ordinary rating structure adopted by Council for 2017/2018 but applying new land valuations for rating purposes applicable for the 2020/2021 financial year. The ordinary rate levy for 2020/2021 was a month later this financial year due to the COVID-19 Pandemic and the relaxation of some Council statutory obligations by the Office of Local Government for one month. For the 2021/2022 financial year, Council reverts to rate pegging with retention of the additional SRV yield as part of the rating base. IPART has already set the rate peg for the 2021/2022 financial year at 2.0%.

The cumulative 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, the yield for 2019/2020 being $3,475,300 and the yield for 2020/2021, being the final year of the SRV, $4,788,600.

Upon adoption of the 2020/2021 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 2020/2021 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 2020/2021 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 2020/2021 financial year.

The total 2017/2018 SRV Allocation for 2020/2021 as indicated in Attachment 1 is $4,940,300.

Note that whilst the 2020/2021 SRV levy is $4,788,600, $151,700 in unexpended funds from 2019/2020 was carried forward to the 2020/2021 financial year providing a total of $4,940,300.

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 2020/2021 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 2020 to 30 September 2020

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2020/1758

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 2020/2021 financial year, reviewed as at 30 September 2020.

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:

1. That Council authorises the itemised budget variations as shown in Attachment 2 (#E2020/88837) which include the following results in the 30 September 2020 Quarterly Review of the 2020/2021 Budget:

a) General Fund – $60,700 increase to the Estimated Unrestricted Cash Result

b) General Fund - $3,045,100 increase in reserves

c) Water Fund - $800,900 decrease in reserves

d) Sewerage Fund - $431,200 decrease in reserves

2. That Council adopts the revised General Fund Estimated Unrestricted Cash Result of $428,200 for the 2020/2021 financial year as at 30 September 2020.

Attachments:

1 Budget Variations for General, Water and Sewerage Funds, E2020/88834 , page 33 ⇩

2 Itemised Listing of Budget Variations for General, Water and Sewerage Funds, E2020/88837 , page 97⇩

3 Integrated Planning and Reporting Framework (IP&R) required Quarterly Review Statements, E2020/88835 , page 105⇩

REPORT

Council adopted the 2020/2021 budget on 30 July 2020 via Resolution 20-357. It also considered and adopted the budget carryovers from the 2019/2020 financial year, to be incorporated into the 2020/2021 budget at its Ordinary Meeting held on 27 August 2020 via Resolution 20-384. Since that date, Council has reviewed the budget taking into consideration the unaudited 2019/2020 Financial Statement results and progress through the first quarter of the 2020/2021 financial year. This report considers the September 2020 Quarter Budget Review.

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

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

Consolidated Budget Cash Result

General Fund Cash Result Water Fund Cash Result Sewer Cash Result

Principal Activity Principal Activity Principal Activity

Operating Income Operating Expenditure Capital income Capital Expenditure

The pages within Attachment 1 are presented (from left to right) by showing the original budget as adopted by Council on 27 June 2019 plus the adopted carryover budgets from 2019/2020 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 2021 as at 30 September 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 provides an explanation of the variation.

There is also information detailing restricted assets (reserves) to show Council’s estimated balances as at 30 June 2021 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 Councils 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 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 2020 of each reserve to show a total cash position of reserves with any difference between that position and total cash and investments held as available cash and investments. It should be recognised that the figure is at a point in time and may vary greatly in future quarterly reviews pending on cash flow movements.

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

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

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

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

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

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

CONSOLIDATED RESULT

The following table provides a summary of the overall Council budget on a consolidated basis inclusive of all Funds’ budget movements for the 2020/2021 financial year projected to 30 June 2021 but revised as at 30 September 2020.

2020/2021 Budget Review Statement as at 30 September 2020	Original Estimate (Including Carryovers) 1/7/2020	Adjustments to 30 Sept 2020 including Resolutions*	Proposed 30 Sept 2020 Review Revotes	Revised Estimate 30/6/2021 at 30/9/2020
Operating Revenue	84,311,000	0	734,100	85,045,100
Operating Expenditure	91,880,000	380,000	810,200	93,070,200
Operating Result – Surplus/Deficit	(7,569,000)	(380,000)	(76,100)	(8,025,100)
Add: Capital Revenue	27,338,600	141,000	102,900	27,582,500
Change in Net Assets	19,769,600	(239,000)	26,800	19,557,400
Add: Non Cash Expenses	14,986,200	0	0	14,986,200
Add: Non-Operating Funds Employed	27,000,000	0	0	27,000,000
Subtract: Funds Deployed for Non-Operating Purposes	(96,029,000)	(397,000)	1,846,900	(94,579,100)
Cash Surplus/(Deficit)	(34,273,200)	(636,000)	1,873,700	(33,035,500)
Restricted Funds – Increase / (Decrease)	(33,916,400)	(636,000)	1,813,000	(32,739,400)
Forecast Result for the Year – Surplus/(Deficit) – Unrestricted Cash Result	(356,800)	0	60,700	(296,100)

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 2020:

Opening Balance – 1 July 2020	$724,300
Plus original budget movement and carryovers	(356,800)
Council Resolutions July – September Quarter	0
Recommendations within this Review – increase/(decrease)	60,700
Forecast Unrestricted Cash Result – Surplus/(Deficit) – 30 June 2021	(296,100)
Estimated Unrestricted Cash Result Closing Balance – 30 June 2021	$428,200

The General Fund financial position overall has improved by $60,700 as a result of this budget review, bringing the forecast cash result for the year to a deficit of $296,100. The proposed budget changes are detailed in Attachment 1 and summarised further in this report below.

Council Resolutions

At the meeting of 24 September 2020, Council resolved through Resolution 20-518 “That Council considers a budget allocation at the September quarterly review to undertake further work on the Rail with Trail on the corridor between Mullumbimby and Byron Bay.” At this point in time there has not been the capacity to identify sufficient funding for this resolution given the overall Council budget position is still projecting a deficit position although a reduced deficit. Further consideration of this resolution will be given when the 31 December 2020 Quarterly Budget Review is completed which will provide a better indication of 2020-2021 financial year outcomes.

Council has not passed any resolutions that impact the unrestricted cash result for the July 2020 to September 2020 quarter.

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	86,900	122,600	(35,700)
Infrastructure Services	(2,457,000)	(2,458,400)	1,400
Sustainable Environment & Economy	573,800	478,800	95,000
Total Budget Movements	(1,796,300)	(1,857,000)	60,700

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 Revenue program, it is proposed to increase income by $62,800 as the final amount allocated to Council for the Financial Assistance Grant (FAG) is more than the budget. This is offset by a decrease in income of $30,300 due to the interest charged on overdue rates not being applied to any ratepayers until 1 January 2021 given the decision by the NSW Government to set the interest rate at 0% until this time.

· 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 increase operating expenditure by $68,800 due to costs involved with the procurement of the electricity supply contract.

· In the Community Development program it is proposed to increase operating expenditure due to the BCA compliance maintenance ($9,100) and building asbestos removal ($32,900) program continuing. These can be funded form the Community Building Maintenance reserve.

Infrastructure Services

· In the Projects and Commercial Development program, it is proposed to increase capital expenditure due to a budget being required for Lot 22 Mullumbimby ($50,000) and Lot 102 Depot Relocation ($10,000), as there are ongoing investigations and development of future use options.

· In the Local Roads and Drainage 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 second and third 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 decrease income and expenditure due to the supplementary portion of the block grant being utilised on the Ewingsdale road project.

· In the Open Space and Recreation program, there are a number of adjustments outlined under Note 14 in the Budget Variations explanations section of Attachment 1. Further disclosure is included in the fourth page of Attachment 2 under the budget program heading Open Space & Recreation.

· In the Waste & Recycling program it is proposed to increase operating income as the actual income expected for domestic waste management charges ($71,800), Commercial Annual charges ($184,000) and the annual Waste operations charge ($21,600) are more than the current budget. It is proposed to decrease capital expenditure due to the amenities building works and the rehabilitation of the landfill not expected to be completed in 2020/21. These are funded through the Waste Management reserve. Funding is also provided from the Other Waste Reserve to reimburse the Plant Fund for plant purchased last financial year.

· In the Cavanbah Centre program, it is proposed to increase expenditure due to a budget required for the new booking system ($26,000) and concrete slabs for new grandstands ($24,800).

· In the Facilities Management program it is proposed to decrease capital expenditure due to the Byron Hospital Development ($2,850,000) being completed in the next financial year. There are various other capital works adjustments outlined under Note 19 in the Budget Variations explanations section of Attachment 1. Further disclosure is included in the fifth page of Attachment 2 under the budget program heading Facilities Management. .

Sustainable Environment and Economy

· In the Development Certification program, it is proposed to increase operating income due to increased income from activities over road reserves.

· In the Environment & Compliance program, it is proposed to increase the budget for on-site sewerage installation and applications by $25,000 to match actual income received.

· In the Planning Policy & Natural Environment program, it is proposed to add a budget for approved grant funded projects including Streets as Shared Spaces ($125,000), the Communities Combating Pests and Weeds project ($299,700) and the Byron Arts and Industrial Estate Pocket park project ($44,900).

WATER FUND

After completion of the 2019/2020 Financial Statements the Water Fund as at 30 June 2020 has a capital works reserve of $9,260,100 and held $1,483,600 in section 64 developer contributions.

The estimated Water Fund reserve balances as at 30 June 2021, and forecast in this Quarter Budget Review, are derived as follows:

Capital Works Reserve

Opening Reserve Balance at 1 July 2020	$9,260,100
Plus original budget reserve movement	(1,406,900)
Resolutions July - September Quarter – increase / (decrease)	0
September Quarterly Review Adjustments – increase / (decrease)	(720,900)
Forecast Reserve Movement for 2020/2021 – Increase / (Decrease)	(2,127,800)
Estimated Reserve Balance at 30 June 2021	$7,132,300

Section 64 Developer Contributions

Opening Reserve Balance at 1 July 2020	$1,483,600
Plus original budget reserve movement	(620,500)
Resolutions July - September Quarter – increase / (decrease)	0
September Quarterly Review Adjustments – increase / (decrease)	(80,000)
Forecast Reserve Movement for 2020/2021 – Increase / (Decrease)	(700,500)
Estimated Reserve Balance at 30 June 2021	$783,100

Movements for Water Fund can be seen in Attachment 1 with a proposed estimated decrease to reserves (including S64 Contributions) overall of $800,900 from the 30 September 2020 Quarter Budget Review.

SEWERAGE FUND

After completion of the 2019/2020 Financial Statements the Sewer Fund as at 30 June 2020 has a capital works reserve of $6,884,700 and plant reserve of $896,200. It also held $8,117,300 in section 64 developer contributions.

Capital Works Reserve

Opening Reserve Balance at 1 July 2010	$6,884,700
Plus original budget reserve movement	(2,958,400)
Resolutions July - September Quarter – increase / (decrease)	0
September Quarterly Review Adjustments – increase / (decrease)	(349,200)
Forecast Reserve Movement for 2010/2021 – Increase / (Decrease)	(3,307,600)
Estimated Reserve Balance at 30 June 2021	$3,577,100

Plant Reserve

Opening Reserve Balance at 1 July 2020	$896,200
Plus original budget reserve movement	0
Resolutions July - September Quarter – increase / (decrease)	0
September Quarterly Review Adjustments – increase / (decrease)	0
Forecast Reserve Movement for 2020/2021 – Increase / (Decrease)	0
Estimated Reserve Balance at 30 June 2021	$896,200

Section 64 Developer Contributions

Opening Reserve Balance at 1 July 2020	$8,117,300
Plus original budget reserve movement	(2,202,600)
Resolutions July - September Quarter – increase / (decrease)	(451,000)
September Quarterly Review Adjustments – increase / (decrease)	(82,000)
Forecast Reserve Movement for 2020/2021 – Increase / (Decrease)	(2,735,600)
Estimated Reserve Balance at 30 June 2021	$5,381,700

Movements for the Sewerage Fund can be seen in Attachment 1 with a proposed estimated overall decrease to reserves (including S64 Contributions) of $431,200 from the 30 September 2020 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 30 September 2020.

Total Legal Income & Expenditure as at 30 September 2020

Program	2020/2021 Budget ($)	Actual ($)	Percentage To Revised Budget
Income
Legal Expenses Recovered	0	0	0%
Total Income	0	0	0%

Expenditure
General Legal Expenses	200,000	159,500	79.74%
Total Expenditure General Fund	200,000	159,500	79.74%

Note: At the time of writing this report in October, Council has incurred additional expenditure that brings the total legal expenditure for 2020.21 to $212,100. This is slightly more than the current budget and can be funded from the legal services reserve that currently has a budget of $500,000. This will be reviewed and adjusted at the 31 December 2020 Quarterly Budget Review.

Financial Implications

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

5.5.1.1

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

The 30 September 2020 Quarter Budget Review of the 2020/2021 Budget has improved the overall budget result by $60,700. This brings the movement against the unrestricted cash balance attributable to the General Fund to a deficit of $296,100 for the year, leaving the estimated unrestricted cash balance attributable to the General Fund at an estimated $428,100 at 30 June 2021. This is an improved 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.

It is the view of the Responsible Accounting Officer that the short term financial position of the Council is still satisfactory for the 2020/2021 financial year, having consideration of the original estimate of income and expenditure at the 30 September 2020 Quarter Budget Review.

This opinion is based on the estimated General Fund Unrestricted Cash Result position and that the current indicative budget position for 2020/2021 outlined in this Budget Review continues to improve for the remainder of the 2020/2021 financial year. Council must remember it has a short term financial goal of maintaining $1,000,000 in unrestricted cash and if it is of the view to recover this position by 30 June 2021, the budget position must continue to improve by $571,800 to a surplus position of $275,700.

Venue	Conference Room, Station Street, Mullumbimby
Date	Thursday, 12 November 2020
Time	2.00pm